Performance management in many organizations has evolved beyond job descriptions, annual reviews, and performance improvement plans.

And, as the pandemic continues to push physical distance between employees and supervisors, many businesses are looking for new ways to incentivize, motivate, and grow their employees in a new and ever-changing environment.

Today’s guest says that many of the current and coming changes were inevitable—the pandemic has only accelerated them. Managers have to find new ways to get the best out of their people and employee’s expectations from employers are also changing.

During this thirty-minute episode, the speakers talk about Dereks’s topic for the upcoming Strategic Mindset Conference. They cover remote work, artificial intelligence, new performance models, and the gig economy.

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Derek Crews

Dr. Derek Crews is Associate Professor of Management in the College of Business at Texas Woman’s University. Derek’s experience and certifications include Past President of the North Texas Society for Human Resource Management; Past Vice-President for Membership; Texoma Human Resource Management Association; Senior Certified Professional of the Society for Human Resource Management (SHRM-SCP); Senior Professional in Human Resources (SPHR), Master Trainer; AchieveGlobal, and Master Trainer; Development Dimensions International. He is also a graduate of Harvard University’s Institute for Management and Leadership in Education.

Prior to his academic career, Derek served in various managerial and supervisory roles, including Vice-President, Finance and Administration for Texas Parcel Service. He has consulted with organizations as diverse as the Texas Workforce Commission, Workforce Texoma, Gwinnett Technical College, Texas A&M, Black & Decker, Alcoa, Texas Instruments, Tyson Foods, and Walmart. Derek’s publications include the textbook Mastering Human Resource Management, and articles published in International Journal of Productivity and Performance Management, International Journal of Human Resource Studies, International Journal of Business & Social Sciences, and Leadership & Organizational Management Journal.

Contact

940-898-2013| dcrews@twu.edu

Transcript

Derek Crews: Work used to be some place that you would go. And now work is not necessarily someplace that you go, it’s something that you do. And again, some of this depends on the company and the type of work. If you’re working in a warehouse, you have to be there to do the work. But many, many jobs particularly those work at home jobs, that’s a concept that was really resisted for many years by people who just thought, “They’re going to be goofing off. They’re not going to be doing their job. They’re going to be sleeping late and they’re going to be watching TV or out on the fishing boat when they should be working.”

Mike Coffey: Good Morning, HR. I’m Mike Coffey. And this is the podcast where I talk to business leaders about bringing people together to create value for shareholders, customers, and the community.

Please follow, rate and review Good Morning, HR on Apple Podcasts, Stitcher, Spotify, or wherever you get your podcasts. You can also find us on Facebook, Instagram, YouTube, or at goodmorninghr.com.

Performance management in many organizations has evolved well beyond job descriptions, annual reviews and the dreaded performance improvement plan. And as the pandemic continues to push physical distance between managers and employees, many companies are looking for better ways to incentivize, motivate and grow their employees in this new and ever-changing environment.

My guest today says that, “Many of the current and coming changes were inevitable. The pandemic’s only accelerated them. Managers have to find new ways to get the best out of their people. And employees’ expectations from employers are also changing.”

Dr. Derek Crews is Associate Professor of Management at the College of Business at Texas Woman’s University. He’s the author of the HR textbook ‘Mastering Human Resource Management’. So he’s done in one book what I’ve not been able to do in 30 years. He will also be discussing the future of work at the Fort Worth HR Strategic Mindset Conference on September 17th. Thanks for joining us, Derek.

Derek Crews: Thank you, Mike. It’s my pleasure.

Mike Coffey: I know performance management is a big area of your study and your academic work. I’ve been in HR 30 years and you’ve been around at least that long. We won’t start carbon dating ourselves. But what do you think over your career in HR, the biggest shift in performance management? What do you think the biggest shifts been in how employers approach managing their employees’ performance?

Derek Crews: Well, the biggest shift really has just been within the last decade and that started with a few large corporations. And then gradually, just in the last maybe three or four years, a few more companies are catching on. But many, many companies are still using what I would say are outdated, what we might also call traditional performance management systems. So the shift really has occurred in some companies and then there’s many other companies that have started to think about new ways of doing things. And then there’s a lot of companies that are still using a similar system that what they might’ve been using 20, 30, 40 years ago.

In fact, when we think about traditional performance appraisals, for example, an annual appraisal where a manager would rate the employee, that system actually goes back several thousand years. We have documentation that the wide dynasty in the third century was using a raider to go around and rate the performance of members of the Imperial Family. And there’s all kinds of problems that have been studied for most of the 20th century. And when we were studying, conducting research, and you can find articles published on, for example, on Raider bias from a hundred years ago, and those same types of issues happens in the third century.

There’s one comment in the record where people were complaining about the Imperial Raiders of the Wei Dynasty saying that the Raiders seldom rate men according to the metrics, but according to who they like and don’t like. 2000 years later, the Industrial Revolution came along and now we have more and more people in roles of this new job called managers and a system, the Likert Scale, where you rate people on one to five on different aspects of their performance, and you do it once a year and you give them feedback.

That has stuck with us really just until this last past 10 years. That’s one of the things I’ll be talking about at the Strategic Mindset Conference and this presentation is called ‘The Future of Work’. We’ve been hearing about that for several years now, but many of the trends I’ll be talking about, including performance management, really were accelerated by the pandemic. And I guess you could say in some ways that the future of work is already here, and we have to adapt.

Mike Coffey: Yeah. So the old “exceeds expectations”, “meets expectations” or “needs improvement” that we saw all those years ago, I guess I shouldn’t be, but I’m kind of surprised that those are still around, because I don’t know that they’ve ever been particularly helpful to the employee or the employer. And I’ve certainly seen tons of situations where an employer found themselves in a position where they terminated somebody for poor performance and we look back at their performance reviews and it was always “meets” or “exceeds” expectations for everything that we just now we want to fire them for.

Derek Crews: When we think about these performance appraisals, we need to distinguish between performance appraisals and performance management. Performance appraisals are what many companies are just doing their way with entirely, but you don’t want to do away with performance management because you do need people to perform. And it really begins with hiring the right people.

One of the things that we’ll be sharing at the conferences, five short mini case studies on companies that have ditched the performance appraisal system and are doing something different. And one of them, for example, is Netflix. They have five tenants of managing people and the first one is Higher reward and tolerate only fully formed adults. So you hired the right people; they showed that they have performance metrics; you incentivize and reward them for achieving those metrics; you provide them with ongoing feedback and coaching as needed; but then, if they’re not performing, you move them out and you don’t wait a year to do it.

And it also relates to the policies and procedures that flow typically out of HR, for example, the vacation policy. The vacation policy at Netflix is “Take one”. That’s it. If you need one, take one. If you need a day off, take a day off. If you need two weeks off, take two weeks off, just make sure… In other words, there is no official vacation policy other than that they say that it is: if you need it, take it. But the policy is performed and then we don’t worry about all these other little details. But that only works if you did step one right: higher reward and tolerate only fully formed adults.

Mike Coffey: Yeah. And I think if we start applying that to many workplaces, you’re going to have to eliminate a third of the workforce right up front. I can see immature adults being the next protected class in some states, if we started trying to do that everywhere.

Derek Crews: Well, some of this depends on the type of workforce that that you have at your company. And it’s necessary to distinguish, for example, between knowledge workers and a professional workforce; and, for example, entry-level where you have a lot more turnover typically, retail, the types of jobs where someone really does have to be there and start at a certain time and stop at a certain time and follow a certain types of procedures. Yes. I mean, I guess that’s what Netflix means by “Fully formed adults”, is hiring mature people.

Mike Coffey: Yeah. And that would be… Yeah. That can be hard to find out now.

Derek Crews: Well, and that’s certainly true too: hard to find and hard to keep. We’re all hearing about the great resignation now.

Mike Coffey: Workplace flexibility, like what Netflix is giving us as one part of it, but what are some other performance models you see? You mentioned getting rid of the performance review, which we did over 10 years ago. Everybody in my company gets daily updates on their performance because everybody has numbers, production, numbers, and quality numbers and they get them every day, and they know exactly where they stand. And we have to address performance shortfalls; if we get somebody whose quality is low for a period of time for even two or three days, we’re having conversations with them about what’s going on there and where we need to improve or what’s happening.

And I think that, especially with the younger generations and millennials and centennials and all of those, they love that ongoing feedback. That’s what they need. They want to know where they stand and they don’t want to wait till next January to find that out. And, quite honestly, I don’t know that my memory or my record keeping is good enough that I can give them a feedback in a year about how they’ve done over 12 months, but they’ve got constant feedback.

What are some other models that employers are using? If they’re not doing performance appraisals, how are they giving employees feedback on their performance?

Derek Crews: There’s several things that are happening. Some companies are using a performance management app that uses a performance snapshot or some that sometimes they may call it a “Performance dashboard”. It’s similar to what you’re describing, where instead of waiting for some period of time to pass by, a year, six months, whatever that might be in the company, that it becomes more of an ongoing feedback process where maybe every day, or at least weekly, employees can see what their performance is. Managers can see what the performance is, and they can have these ongoing conversations and dialogues about identifying what needs to be done in order to get the performance back on track. It’s not so much an evaluation as much as it is really coaching.

In a smaller organization, you may have someone that, like yourself, Mike, someone that is really out there on the front end of this trend and is able to coach each team member, or maybe have a small team of managers, small enough to where they’re able to keep up with the performance and provide the type of feedback that’s needed on an ongoing basis. But in larger organizations where you have hundreds, or sometimes even thousands of people in leadership roles, you have a lot of people that don’t naturally do this.

And therefore, training managers how to coach is a real need right now, training them on how to give feedback and also getting away, in some cases, from the mindset that it has to always be a manager providing that coaching and feedback. Some companies are using peer-to-peer coaching, where if an employee is struggling with something, they can reach out to a network and sometimes it’s on an app and it just ask a question, “I need help doing this”. And it doesn’t have to be a manager looking over their shoulder saying, “Do it this way”. It can be a colleague that can say, “Well, here let me help you with that.”

Mike Coffey: In our organization, when we were remote, we went to all our telephony is on Zoom, our chat is on Zoom, and our videos all on Zoom. And I can see all the chat channels that my employees in different sections of our organization are using to talk to their team, and they’re asking questions all day long. We’ve got a quality review process that involves sampling, where peers review each other’s work from the previous day and give feedback on areas that things that were missed and flagged, and we can… That’s how we get everybody’s numbers.

At first, it was really challenging to get peers, especially to give feedback to one another, that was seen as negative. But I think we’ve coached them to the point where they know this isn’t a negative thing. They trust us not to use this as a stick to beat them with, so they’re not hurting their peer. They’re improving their team when they do that. But it’s been interesting and I’ve been gratified by our employees when I just drop into the different chat channels and I see how they’re helping each other. And I think that really has built a lot of team cohesion, even though we’re all remote.

Derek Crews: Yeah. And that’s exactly right.

Something else that we have to realize has changed, and that is we don’t have 90 days necessarily to train someone and get them up to speed and then do annual performance appraisals, because many employees just don’t stay there that long. I was at ATD 21 International Conference this week and I attended one session that was a study that had just been released. And one thing jumped out at me and that is that early career workers, their mindset is that you should not stay at one place more than two to three years or you’ll become stagnant. That’s a little bit different thinking in terms of many of us that have been in the workforce for 30 or 40 years. It’s just the opposite. It used to be you didn’t want to stay anywhere less than three or four years, or you would get a reputation as a job hopper. And now it’s kind of flip-flopped.

So we have to, in some cases, just throw away our old system and reinvent how we’re doing performance management and make it more organic. And that same mindset applies, for example, to learning how do people learn their jobs. We probably need to be getting away from the idea that you’re going to go do trainings every so often.

You may be once every six months or a year, or whenever a new software or procedure, or maybe a new regulation that we have to comply with comes out, and looking at how to make this an organic process to where we’re not periodically retraining people or reskilling people; or having to upscale people and dealing with these skill gaps that have occurred, because we haven’t been doing any training for five years; and make that an ongoing organic part of the workforce, where people are learning a little bit every single week, maybe a little bit every day on their job. And performance is similar, making it an organic part of the job.

And that that word, Trust, is key also because this type of performance management, and even what I said about Netflix in terms of the vacation policy, this all really weighs or hinges heavily on Trust, that goes both ways: the team members need to be able to trust the leadership and the leadership needs to be able to just trust the team members for this all to work.

Mike Coffey: Yeah. When the pandemic forced a lot of companies to go remote, the conversation was “How can I… If my employees, if I can’t see what they’re doing, how do I know they’re going to get the work done?” And Steve Pegler, who was on our podcast a few episodes ago, said his question back to those managers was, “Well, if you didn’t trust them, why didn’t you hire them in the first place?” And it goes back to, like you said earlier, hiring the right people and putting them in the right environment.

Derek Crews: Work used to be some place that you would go. And now work is not necessarily someplace that you go. It’s something that you do. And again, some of this depends on the company and the type of work. If you’re working in a warehouse, you have to be there to do the work. But many, many jobs particularly those work at home jobs, that’s a concept that was really resisted for many years by people who just thought, “They’re going to be goofing off. They’re not going to be doing their job. They’re going to be sleeping late and they’re going to be watching TV or out on the fishing boat when they should be working.”

But we know, and the pandemic has showed us, that remote work can be very productive and there are ways to manage effectively a distributed remote workforce or a hybrid workforce. But the systems that we have in place still at many companies with how we manage people, how we do performance appraisals they weren’t designed for this type of workforce. It’s a little bit like if you have a computer problem, bringing a toolbox with a set of socket wrenches to fix it. We need new tools for a different situation.

Mike Coffey: And let’s take a quick break.

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And now back to my conversation with Derek Crews.

The job description has been like the roadmap for a long time. Okay, here’s your job description and if you can do what’s in the job description, you’re good. But really… I was in healthcare HR 20 plus years ago, and we were talking about competencies back then. But now, outside of healthcare, I’m seeing a lot of employers focus more on competencies and a pathway across somebody’s career for developing these different competencies and compensation even tied to that.

Can you talk a little bit about how employers are in maybe less technical organizations. Healthcare is pretty technical or engineering, those kinds of things where you think about competencies. But maybe less technical roles that employers are using competencies to manage performance?

Derek Crews: Sure. We’ve seen competencies come in in several aspects. One is, and it probably started really with training and certifications and building, training models around competencies, but it has now started to work into job descriptions and job descriptions can change. They do change just on a regular basis. The old idea of a one sheet of paper where you list all the job duties is really kind of another outdated concept and we need to begin to think about it more organically.

One caveat to that is there are some things that HR still has to identify and typically that’s on a job description. Then that’s, for example, essential job functions: how do you comply with ADA without knowing what the essential job functions are? So I don’t want to imply that we can just do away with that altogether, but in terms of learning and in terms of performance management, that’s where competencies can be very, very helpful.

Also another aspect of competencies that is helpful is competencies usually relate to more than one job. It gets you out of this idea of thinking about what a job is. A job isn’t necessarily a title and a set of duties. Many jobs have similar competencies that run across an organization. And an employee, if they have certain competencies, they’re very flexible and they can move around the organization.

It also gets us away from thinking about this career ladder, where you come in in an organization and you’ve seen these pyramid structures where you come in into our organization at the bottom level, and then here’s the next promotion, and then here’s the next one, and here’s the next one, and everyone wants to be at the top of the pyramid. And there’s only a few positions at the top of the pyramid. Then we started, maybe 10, 15 years ago, we started hearing this concept of a career lattice, where maybe you can make lateral moves across the organization, and you could keep employees engaged that way.

Now we’re starting to hear more about these career jungle jams, where it’s not about necessarily climbing an organization, it’s about developing a set of competencies, and you can just move around within an organization. And it might not even be about a job title at all; it’s about, “Here’s a project that needs to be done, and you’re going to go work on that project. And when you’re done with that, then maybe there’s another project that you’re going to be working on”.

The nature of what we think of as a job itself is changing and performance appraisals, talent development, learning models, job descriptions, all of these things really go back. You can trace most of them back to the industrial revolution and is time to have a complete overhaul in many ways. And much of that has… We’ve seen these little trends for years, but we just hit the gas on it with the pandemic. And we are probably, I would guess, we may be 20 years down the road where we would have been otherwise on some of these things without the pandemic accelerating it, particularly when it comes to distributed remote work.

Mike Coffey: Oh yeah. That’s interesting because that’s how our compensation has been set up for a long time for my analysts, which is the majority of our employees. It’s all competency based and they pretty much know what everybody else is making, because we’re real transparent about how compensation is tied to competencies. The more competencies they have, the more they know, “If I can get this competency, even if it’s not a competency, I’m going to use on an ongoing basis in my current role”. Once they test it out for that competency and demonstrated that competency, we’re going to pay them for it, because that makes them more valuable to us in the event that somebody is out sick or leaves and we have to shuffle people around to get the work out the door. I know I’ve got these folks who I’m paying more, maybe for competencies they aren’t always using, but they’re worth every nickel of it the minute I need that competency to be put in place.

What are empower employees expectations of employers changing? I mean, you mentioned that they don’t want to go stagnant and so they’re willing to jump ship in three or four years. But what are the other, what are the expectations?

If an employer really wants to retain those great employees and get them not to lose that investment as they go on to another place, what expectations should employers be expecting to have to meet on the employee’s part?

Derek Crews: Well. You mentioned earlier, I had published a book that came out the first of this year, ‘Mastering Human Resource Management’. And one of the things that makes that distinctive from every other HR textbook, and that is an undergraduate HR textbook, but makes it distinctive from the other books on the market is focused on employee engagement. Most HR textbooks are written from the perspective of the front of HR, of what I need to do in order to protect and advance the organization and look out for the organization’s interest. And employee engagement looks at that from the other perspective. I have an entire chapter on employee engagement, and that’s really what you’re talking about, is how do we keep employees engaged and what do employees want from their employer, what do they want from their work.

And I’ll talk about this more at the conference there. I would probably be going for another 30 minutes on just on this topic alone, but I’ll just don’t touch on two things. The first one is, we’ve talked about a little bit and in the research studies recently, one of the things that they want the most is trust. And then, the other one that is right at the top is work-life balance. And when employers think about employee engagement, it’s helpful to ask, “Well, what do you really mean by that? What does employee engagement look like?” And typically the answers that we get in research from employers is, “Employee engagement looks like performance, it’s outcomes. Engaged employees perform well”. And that’s true, but it’s only one aspect, one of three aspects of employee engagement.

There’s actually three aspects to it, three dimensions of it: there’s a cognitive dimension; there’s an emotional dimension; and there’s a behavioral dimension. And that cognitive piece has to do with how employees think about their job. Some of that is peer-to-peer. Some of it’s what are their coworkers saying about it and what are people on social media saying about what it’s like to work at that company.

And then, the emotional aspect of it has to do with, does that employee identify with that organization? Do they have a sense of belonging? Do they have positive attitudes towards that organization? Do they feel that that organization values them as a person? And then, the third one is that performance piece. Employee engagement involves something that we think, something that we feel, and then also something that we do.

When I work with companies on engagement, there’s two different surveys. I use one is called Gallup Q12, to get a baseline on those things: what do employees think about the company? How do they feel about working there?

And for some people you might think, “Well, that’s great. That’s a touchy feely thing, but I want performance.” And yes, you do want performance, but it’s all works together: the cognitive, the emotional and the behavioral piece. But what we do know for sure, just from studies that have come out just in the few months, that at the very top of what employees want, of course, pay. Pay is always there. We’re not volunteers. We’re working for an income. But also at the top are Trust, and Work-Life balance.

Mike Coffey: I’m sure you’re going to have to unpack a lot more of that at the Fort Worth HR Strategic Mindset Conference on September 17th.

But that’s all the time we have today. Thank you for joining us, Derek.

Derek Crews: Thank you for having me, Mike. I look forward to the conference.

Mike Coffey: And you can register for the Fort Worth HR Strategic Mindset Conference at fwhr.org. And again, that’s on September 17th.

And thank you for listening. You can find previous episodes, show notes and contact info for our guests at goodmorninghr.com or on Facebook, Instagram, or YouTube.

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And I’m Mike Coffey. As always, please don’t hesitate to reach out if I can be of service to you personally or professionally.

I’ll see you next week. And until then, be well, do good, share with others. Have a great week.