Navel Gazing larger Goldman Sachs joins a long chain of icons that are shaking up their performance appraisal process – wow, probably 15 to 20 years late and even then they are just tweaking them around the edges when there are real quantifiable and empowering solutions available.

Where would we be if we managed our other assets like these companies have been managing their people?  Maybe the better question is where would we be now if we had been managing our people assets effectively for the last 20 years?  What if we had included proper position definitions, quantitative measures and empowerment not to mention placing HR assets on the balance sheet?

As the Human Times Monday 30th May 2016 edition (humantimes@humantimes.us.com) reported Goldman Sachs “experimenting with an online system” joins Accenture “more frequent check ins between management and employees”, General Electric (similar to Accenture), Gap, Abode and Microsoft “abolished numerical ratings” with J.P Morgan, Chase & Co and Citi Group making “management changes focussed on retaining junior bankers”.  PwC and Delloite are also changing their performance appraisal system, jumping from one subjective system to another.  These prides of lions are squeaking not roaring.  Just imagine if we managed our finances or stock or physical assets like we do our HR – let’s sit down at the end of the month to casually discuss how we feel about the revenue and profits, what about the cost and how do the stock levels look like to you?

There have been human capital management methodology and tools around for 20 years that define the expectations of positions including measurable outcomes that empower the employees to understand how they are performing and utilise initiative to progressively improve their contribution.  This human capital management approach will enable us to put the HR assets on the balance sheet; currently only as a balance sheet note.  So why haven’t these business icons adopted these modern approaches; these “wonderful changes in “performance appraisal” that they are being announced are at best taking them into the mid 20th century and not into the late 20th or early 21st century.

The modern human capital management approaches have a focus on defining a dynamic strategic direction. They then consider how to measure the achievement of this direction in all areas of the business and what capabilities are required to deliver the strategic direction at the standard set by the performance measures.  If the organisation understands the capabilities that are required, the positions (i.e. optimal contributing elements) can be defined properly allowing the organisation to employ and keep employees with the appropriate competence and potential to develop.  If we now incorporate quantitative measures into the role definition, we can empower the employees to produce the deliverables at the standard expected.  This applies equally to the Board, CEO or delivery driver.  The principles are no different to the management of any other asset in the company; define the competencies for the position and ensure the employee and supervisor/manager possesses these competencies and address any competency gaps.

Why these iconic companies and many other organisations especially government, have not made real change has Maxumise lost as addressed here and in previous articles.  The bigger question is how much of this archaic approach has contributed to say the GFC and current concerns about productivity in countries like UK, Canada and Australia.  We suggest it is a major contributor to low productivity with a lack of alignment between what the organisation needs and the actual competency levels of the employees.  The old subjective performance management of people that is being thrown out are disincentives to acquiring new competence and growing, let alone using initiative to perform.  Going from one subjective system to another is definitely not the answer.

Australia is in the middle of a federal election and we hardly ever hear the politicians talk about productivity as in the short term this is not a very palatable platform.  I guess we cannot blame them from taking the easy approach and avoiding the real issues as they know increased productivity will result in an employment “J – Curve” before the real economic growth through productivity takes effect.  Is it the same “too hard basket” for these large icon companies?  Like governments is it easier to mask the cost of inefficiency and avoid exposing their HR Assets on the balance sheet?

Max Underhill

Maxumise Consulting Pty Ltd

Mobile: 61 (0)407 998 516

Email: info@maxumise.com