Is ratingless the answer to the performance management challenge?

14 July 2016

Angel Hoover, practice leader of Willis Towers Watson's EMEA Talent Management and Organisational Alignment unit, reflects on the rise of ratingless approaches and what is needed for HR directors and organisations to successfully embrace the performance management phenomenon.

Today’s business headlines reveal ongoing debate about performance management strategies and tactics, in part due to the low satisfaction with the current approach – a recent survey found that only 34% of employers feel their performance management process is effective. As a result, organisations large and small are attempting to rewrite the book on performance management by, among other things, eliminating the rating of employees and creating what’s termed “ratingless” approaches. Examining the supposed rush into ratingless feels very similar to what we saw in the early 2000s, when many organisations were enamored with the use of forced rankings.

Why Go Ratingless?
In a study that Willis Towers Watson
 conducted in 2014, we found that 4% of the participating organisations did not use performance ratings. Replicating this survey in 2016*, that number stayed relatively stable at 5%.

Traditional performance management approach

Why, then, is there so much discussion on moving to a ratingless system? As organisations consider the implications, they are attempting to address a number of key issues. First, employees are looking to have more meaningful discussions with managers about performance, development and career options. Traditional systems unintentionally create a focus on the final rating and even highly effective managers are challenged to facilitate a discussion that doesn’t start at the rating, rather than on how successfully the employee delivered on expectations. Second, removing the rating allows a more organic discussion of outcomes, behaviours and career potential. Third, it reduces administrative time for completing annual forms. Finally, removing ratings from the process may enhance overall employee engagement. Mount, Scullen and Goff’s study** confirmed that performance ratings can be disengaging for most employees, regardless of the rating.

There are clear risks associated with ratingless systems, one of these relates to the pay for performance link. Most organisations with pay for performance philosophies link pay and performance somewhat formulaically, enabling a more objective method for differentiating pay across varying levels of performance. In removing that objective value, whether numeric or descriptive, that part of the process breaks down.

Another potential downfall has been proven in recent research conducted by CEB***. Managers and employees simply do not replace the time they spent completing mid-year and annual performance forms with more frequent, meaningful discussions about performance and development.

Added to this, identifying high potentials, particularly for succession planning can be perceived as more complex. Since one typical criteria for identification is performance history; no longer can an organisation turn to their HR system to export a list of ”5’s” and “4’s” to consider and discuss as candidates for high potential.

Any organisations considering a ratingless system need to look at reducing the above risks by evaluating impacts to three areas: Process, People and Systems. Employees still need and want to know how they are performing, so it is imperative to be clear about performance expectations, regardless of the design. An updated process should include frequent discussions to ensure clarity on expectations, how the employee contributes to the team or the business, as well as how frequently managers and employees should meet to discuss performance.

Ratingless performance management system

The ability to facilitate quality discussions during a performance year is fundamental to ratingless designs. A manager needs to evaluate an employee’s performance and potential for development, which will be used in formal talent reviews and succession processes. Organisations must then, measure effectiveness of managers through a 360 processes, manager effectiveness ratings from employee engagement surveys and employee focus groups, because the primary source of this data originates from those discussions.

It is important that any system employs technology to aid and enable managers. If the system is based in paper or lives in multiple systems, it reduces usability of past data and increases the time mangers need to complete the admin side. Organisations should look to technology platforms that can capture real-time feedback, using short forms that can completed in 60 seconds or less.

Although going ratingless could be the answer for some organisation’s performance management conundrum, for it to be successful the necessary investment in infrastructure and manager support must be in place. Without it, you may be in no better place than you were under the traditional model.

* Willis Towers Watson, October 2015. Global and Regional Study of Performance Management.
** Mount, M., Scullen, S. and Goff, M., 2000. Understanding the Latent Structure of Job Performance Ratings, Journal of Applied Psychology.
*** CEB, 2016. The Real Impact of Eliminating Performance Ratings, Insights from Employees and Managers.


Why leaders must balance technical expertise with soft skills

17 April 2019

Soft skills matter in the workplace just as much as technical expertise, writes Samantha Caine, Managing Director of Business Linked Teams.

For too long technical expertise has been seen as the marker of a strong candidate for development into a sales or leadership position. Sales and leadership candidates are tasked with demonstrating a diverse and wide-ranging set of technical skills, yet their aptitude in these technical skills or ‘hard skills’ cannot signify great leadership potential. This is why a healthy balance of soft skills and technical ability is required. 

So what exactly is the difference between technical skills and soft skills? In engineering, it’s crucial to demonstrate knowledge of physics as well as a strong grasp on mathematical equations. Yet, in any industry, it’s important for leaders to be able to interact with other people effectively with soft skills like communication, empathy and adaptability. 

Business Linked Team’s 2018 study into internal leadership development revealed that 69% of large organisations are prioritising the identification and development of future leaders from within the workforce. As more and more organisations begin to invest in sales or leadership development within their existing workforces, more focus needs to be placed on ensuring the right soft skills are in place. 

With those soft skills in place throughout the workforce, the business will benefit from a wider pool of potential leaders developing under their noses, and it should be the same where sales candidates are concerned. 

It’s not just about easier access to ideal candidates for these positions without the rigmarole of recruiting from outside of the organisation. The leadership development study also found that 89% of HR decision makers say succession planning has become a top priority. Those currently serving in leadership positions can’t lead forever and the same goes for those generating sales for the business.

Why leaders must balance technical expertise with soft skills

From people leaving for new opportunities or retirement, to people simply stepping aside to focus on other areas of the business, successful leaders and salespeople require experienced and capable successors that will be ready and able to confidently step into their shoes and pick up the mantle without the business experiencing any lapse in performance.

Soft skills make stronger candidates

When it comes to the soft skills required, a strong leader must be able to manage through clear communication and effective time management, coaching and goal setting. They must be able to demonstrate empathy and empower their teams to be successful, productive and fully engaged. And beyond simply giving direction, they must also be able to take direction from those above them and cascade the business strategy down through their teams. 

A strong sales candidate must possess the ability to communicate value to the customer, negotiate well and protect margin or the ability to increase the scope of a particular sales opportunity. 

With the relevant soft skills in place, the business will benefit from increased productivity, greater agility against changing market conditions and greater transparency. In turn, this will provide visibility on issues and inefficiencies while removing opportunity for miscommunication. All of this can transform the culture of a department, improving employee satisfaction and reducing staff turnover. 

Ultimately, developing leadership or sales candidates will require the business to strike the right balance between technical skills and soft skills, and this requires an effective and sustained learning journey.

A balanced learning journey

Facilitating and supporting the development of leadership and sales is best achieved by establishing training groups. By cultivating training groups, businesses are creating talent pools that will inspire and support each other on the learning journey. However, personal goals and learning objectives must be defined for each individual based on their own existing skillsets and the skills that each individual needs to develop. 

With the emergence of e-learning, businesses recognise the value of online-based learning activities, yet many make the mistake of opting for one-size-fits-all solutions which are solely focused on self-study. A development solution will only deliver true return on investment if it combines e-learning activities with group learning activities that provide opportunity for shared experiences and support.

A blended learning solution that combines self-study and face-to-face group learning activities will aid strong development of the talent pool through shared experiences. Through these shared experiences, those undergoing the training will organically develop a support network that supports the development of the group as much as it supports the development of each individual. 

The blended learning approach is supported by one of the seven principles of human learning that socially supported interactions aid the individual development of expertise, metacognitive skills, and formation of the learner’s sense of self. The strongest opportunities for development can be unlocked by blending workshops with online activities such as virtual sessions, peer coaching, self-study, online games and business simulations. But it’s crucial to provide a blend of one-to-one and group sessions too.

Beyond delivering a better learning outcome for the employee, the blended learning approach allows organisations to adapt their training quickly and easily to shifting business demands in an ever-changing landscape.