Counterpoint: Lynda Gratton

People & Strategy, Sept, 2008 by Anna Tavis

COUNTERPOINT

Lynda Gratton

Professor of Management Practice, London Business School

When Gary Hamel and ! asked a group of 20 CEOs at London Business School what was the process that was most broken in their companies, we expected them to talk about production or quality--or even perhaps some manufacturing process. They did not. Almost all said that the process that most irritated and annoyed them was performance management. The emotion in the room was running really high. It was not just that they believed it was broken--they absolutely hated it. They hated the bureaucracy, they hated the form filling, and they hated the ranking.

I have occasionally reflected on this conversation. It is clear that while many companies have been great at innovating their services and products--few (if any) have really innovated management practices such as rewards or performance management. If we have third generation technologies, we also have second-generation managers-and first generation performance management practices. They feel arcane to me as a "Baby Boomer"--and when I talk to my MBA students recently recruited to companies--they describe these processes as positively Neanderthal.

How did we get into this mess--for as the CEOs testify so clearly, it is indeed a mess.

We have always known that good managers, as Drucker pointed out decades ago, give clear, frequent, positive feedback. My own research on cooperation supports this. One of the most crucial organizational levers in the creation of cooperative working environments and collaborative teams is managers who coach and mentor others. This simple action has a profoundly positive effect on others. It demonstrates caring and builds trust and is perhaps one of the most important gifts managers can give to their colleagues--the gift of their undivided attention.

Across the world people engaged in what has been called "positive psychology" have shown that good management practice-supporting others, providing an opportunity for people to flourish and encouraging their development--makes for happier people, better functioning teams and higher performing companies.

The question HR professionals face is how to realize and act on this simple truth.

In his point article Marcus argues that strengths-based integrated system will be a way out of this morass--and that a strengths-based performance system is a good place to start. His analysis of the five flaws is spot on--as the CEOs that Gary and I spoke to will attest. There is no doubt in my mind that his four design principles would make a real difference.

The question the design principles raise is "how can we transform a company so these principles are lived on a day-to-day basis." Here are some thoughts:

* Excite through good practice: Take a look at where some of these practices are already building. Consider for example professionals in the consulting firm McKinsey & Company who are required to complete an annual description of what they have done to build their human capital, or the performance management process at Goldman Sachs that meticulously collects feedback data from a whole community of peers and colleagues. These good practices can provide inspiration and insight.

* Experiment at the margins: Make sure that you are continuously experimenting with new ways of working. For example, BT's innovative approach to managing the performance of a team would never have become widespread without a series of experiments in their Cardiff office that showed how this innovation could work.

* Create signature processes: As Tammy Erickson and I argued in a recent HBR article (March 2007), good practice can be a real spur to action--but great companies also invent their own "signature experience" that sets them apart. By explicitly communicating what makes your firm unique, you can dramatically improve employee engagement and performance.

Performance management is way past its sell-by date. As Marcus argues, now is the time to reinvigorate, refresh and renew.