Performance Reviews are broken. Gallup estimates that a third of Reviews actually cause worse performance, and managers hate wasting an average of 4-5 weeks on the process each year. Our process eliminates the annual Review with its "Me vs. You" quality and replaces it with a "We and Us" process creating collaboration sand results in better employee performance and higher engagement. Dave Wight has spent his entire career as an internal and external performance consultant to help managers and leaders become more effective. He has designed and implemented Performance Review programs and created Performance Review training for a variety of different companies. The indepth knowledge he gained led him to start-up his own consulting firm, LPS Consultants with the designed of a unique Performance Management process that replaces the annual Performance Review that just pisses people off. While both simple and powerful, thjs new process gets ,managers and employees to collaborate and learn how to produce better business results
In this episode
⅓ of all performance reviews result in worse performance is a key piece of evidence that Dave Wight of LPS Consultants shares to make the point that the performance review process used by just about every company with employees is badly broken. Dave provides 5 compelling flaws in the current system and provides the architecture of a new way that is collaborative, continuous, focused on the future, and driven by the employee not the manager. He provides a sensible 3 step process beginning with a pilot phase prior to a full roll-out to a more constructive approach to helping each employee be the best they can be. Listen to the end for the details on a compelling gift from Dave to our listeners.
A glimpse of what you'll hear
02:35 5 reasons why performance reviews are useless when it comes to improving employee performance.
05:35 Replace the annual review process with a continuous, collaborative, future-focused, feedback systems that employees drive, not their managers.
07:25 The strong case to ditch the old and embrace a new way of giving performance feedback.
11:03 3 implementation steps to adopt a continuous, collaborative feedback system.
13:09 Learn about Dave. Email Dave at firstname.lastname@example.org or call him at +1.908.441.6217.
(Note: this was transcribed using transcription software and may not reflect the exact words used in the podcast.)
Centricity Introduction 0:04
WelcomeWelcome to the Best Kept Secret videocast and podcast from Centricity. If you're a B2B service professional, use our five step process to go from the grind of chasing every sale. to keeping your pipeline full with prospects knocking on your door to buy from you. We give you the freedom of time and a life outside of your business. Each episode features an executive from a B2B services company sharing their provocative perspective on an opportunity that many of their clients are missing out on. It's how we teach our clients to get executive decision makers to buy without being salesy or spammy. Here's our host, the co founder and CEO of Centricity, Jay Kingley.
Jay Kingley 0:43
I'm Jay Kingley, co founder and CEO of Centricity. Welcome to our show, where our guests share their provocative perspective on what their target market is missing out on. I'm happy to welcome Dave White of LPS Consultants. Dave works with medium to large corporations to design and implement a unique performance management process that replaces the annual performance review. Dave is based in Hackettstown, New Jersey. Welcome to the show, Dave.
Dave Wight 1:16
Hi, Jay. How are you?
Jay Kingley 1:18
There's one phrase that I recall from all that time I spent in the corporate world, whether I was an employee and manager or an executive, and this phrase touched fear, Dread, loathing, sometimes resignation into the hearts, that of all who heard it. And that phrase was, it's time for your annual performance review. Employees dreaded it, because it tended to be a criticism session, and pretty much useless. And all you really wanted to know was, am I getting a pay increase? Managers hated it, because it took up so much of their time, they really struggled to balance their day to day jobs, with having to create something which their staffs really didn't want to be a part of. And then I even think the top executives, were a little bit like, Thank God, I don't really have to spend a lot of time on this. Because I remember from the days that I was coming up through the ranks, what a worthless, useless exercise and waste of time this was. So Dave, as an expert in this area, I've got to ask you, what is broken about the annual performance review?
Dave Wight 2:45
Well, Jay. There are really five basic reasons why reviews and ratings are useless as feedback and should be eliminated. Those five reasons are number one ratings are judgmental, and that only makes people defensive. And the accuracy and fairness of ratings is always going to be called into question. Secondly, a rating is a generalization for a whole year, so the person doesn't know what they should be doing differently. It's not actionable. Third, the reviews focus on the past and you can't change that, all the time during the reviews been talking about what has already happened, instead of what the person should be doing in the future. Fourth, ratings are demeaning. It's demeaning to an adult to have their work for an entire year minimized or reduced to a number on a rating scale. And I don't care how good the rating is, employees are not in third grade. And finally, ratings really need to be given in real time, or feedback needs to be given in real time. You can't wait for an arbitrary review date. Most people work long enough and they have at least one horror story about a review. One of my favorites is about an employee with a rebel. They've a new manager, who tells her during a review, that she is too political, and it's there and writing on her review. She is flabbergasted and doesn't know what to say. If anything she needs to improve that this in this area. So she asked her manager when he based his conclusion on he tells her it's just his impression. Well, her first thought is that her formal review is not exactly the place for impressions, but she doesn't manage to stifle that thought. And then she realizes that this rude comment is an absolute career killer when anyone else in the company reads her review. Desperation, she tells her manager that she's not going to leave his office until he removes that comment because it's not accurate. He reluctantly complies, but eventually they do develop a positive working relationship. Have you talked to her about this review and she's still she shakes her head in amazement.
Jay Kingley 5:06
Dave you know I think you have really articulated in with some precision and accuracy, this general feeling of the how worthless these reviews are. And you've got, I think the diagnosis of the problem in a pretty compelling way. So let's go and try to give a little hope. So we I think, can all agree how badly the current process is broken? So what's the way that companies should be thinking about this? What at a more, if you will strategic level, how should companies be looking at the feedback and improvement process for their organizations?
Dave Wight 5:51
They need to replace their annual review and rating process with a year long process, where managers and employees learn how to collaborate to produce better business results, they have to work together, and employees need to drive the process, because the primary goal is to get them to improve their performance. And then last but not least, employees and managers need to constantly keep the focus on the future, during the entire year, they only use the past to learn and to inform their focus on future performance, because that's the only thing you have any control over.
Jay Kingley 6:31
So Dave, this is a very different way of looking at the process, I think it's much more constructive. I think it gets the focus on how I can improve going forward, rather than critiquing things that have already happened. And as you pointed out, it's about the timeliness. Because the more time that lapses between what I do and the feedback I get, the less impactful will the constructive feedback be on helping me change and improve. Given that and I think, you know, I think you've got a lot of people's attention. Let's get to the business side of this in the case for making what I think for a lot of people might feel is a radical, if not overdue, change to this critical part of how we manage performance. So let's start with the emotional side, talk through some of the emotional benefits from ditching the old annual performance review and moving to this more modern real time continuous process.
Dave Wight 7:43
First of all, the head of HR, if you eliminate this review process, the head of HR becomes an instant hero. Both employees and managers hate the process, and they'll be elated when it's gone. Secondly, instead of being the internal cop, who's always needs to be avoided, HR will start to be seen as a force for positive change. Third, your create a better work environment that increases employee engagement, and makes you a more desirable employer with lower turnover. And then finally, both managers and employee have the the opportunity to ask for and get commitment for changes in the other person's behavior. What would they like the person to start or stop doing or do more or less of? As an example, manager might ask an employee to inform her as soon as possible if for some reason, the employee can't complete a task or project within the agreed upon timeframe. On the other side of the coin, the employee might ask their manager to stop interrupting them before they've had a chance to complete their thought. Or ask a question.
Jay Kingley 8:59
I think what I'm hearing here, my big takeaway is there's enormous benefit for moving from a system that is inherently adversarial to a system which is inherently collaborative, and helpful, you know, the benefits that are going to flow from that, I think are manifest but let me continue the discussion with the benefits and talk about the hard core let's quantify. Let's get some numbers on the table. Talk to us a little bit about those benefits that you can quantify.
Dave Wight 9:34
Here are three very quantifiable benefits J. First of all, all the managers with direct reports save the more than an average of five weeks that they spend on the review process each year. Secondly, the average cost of a single review ranges from $4,000 to $5,000. This means that for every annual reviews that are eliminated A company has a chance to save up to $500,000 a year. And last but not least, Gallup estimates that 1/3 of all reviews actually result in worse performance. You eliminate the review, you get that performance back.
Jay Kingley 10:19
Dave the idea that for every 100 reviews you do, you're talking four to $500,000 of cost savings, in and of itself is eye popping. But the other thing, maybe even more surprising, is the idea that almost a third of reviews, as they are currently done, actually hurt performance result in worst performance. That's just staggering to me.
Dave Wight 10:45
I know it is kind of mind boggling. And when I first thought that my eyes popped out, and then when I started to think about I said, Yeah, I can understand that.
Jay Kingley 10:55
You've made such a compelling case. And I think this is something that so many of us have felt is broken. But really we haven't seen what's the better alternative. And I think you have painted a much more constructive way to deal with this. And obviously, the case for change is strong. If I'm now an HR executive. And I'm saying I really want to go down this different path. Talk to us about the key implementation steps that a company or the HR department would need to do. To make this their new way of providing feedback to staff?
Dave Wight 11:35
There are three basic steps that companies will need to take. The first one involves forming a small team of both managers and employees who are respected by their peers. And that's the job of this team to design a new performance management process along the lines that I've discussed here. That's step number one, the second step is then they need to pilot that new process for three to six months, in order to get company buy in, because it will be a big change. And then last but not least, they're in a position to to roll out the new process to the entire organization.
Jay Kingley 12:15
We are going to take a quick break, allow our audience to do just a little bit of digestion on this wonderful but very different concept. And then when we come back, we're going to learn a bit more about Dave.
Centricity Introduction 12:33
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Jay Kingley 13:32
Welcome back. We're talking Dave White of LPS Consultants. Let's find out a little bit more about Dave. So Dave, let me start by saying what are the pain points that you solve with your target market? And why do they need you to get rid of the pain?
Dave Wight 13:52
Right off the top Jay and think of for immediate pain points. The first one is one that you've already addressed. Almost everyone hates the annual review process. So a company is going to benefit by eliminating all that negativity. Second, most managers feel it's a huge waste of their time. And it actually interferes with their ability to do their jobs. Employees, the vast majority see it as both biased and unfair, the entire process. And last but not least, Gallup has found a very close relationship between the negativity toward the review process and low employee engagement. That's important because companies with high engagement well here here are some hard metrics. First, they're 21% more profitable than those companies with low engagement. Second, they have 41% lower absenteeism. Third, they see over a 20% higher productivity than their competition. They outperform their competitor and earnings per share by 147%. And there are four times more likely to succeed than companies with low engagement. You add all that up, Jay, fundamentally, this comes down to increase in the probability of a company sustaining its own survival.
Jay Kingley 15:20
Particularly in an area that is so fundamental, as you have alluded to, in terms of getting your staff to be high performers, and engage, people are going to want to seek out help from not just people who say, Hey, I work on performance reviews, they're going to want to seek out the best. So my question to you is, what makes you great at tackling these issues?
Dave Wight 15:51
Jay, I'm never satisfied, and I'll never stop learning. Sometimes I'm able to see relationships or connections between ideas that others don't see until I point them out. I've always loved it when someone could make a light bulb turned on inside my head, where I was saying to myself, Wow, I never thought of it that way before. But it really makes sense. And as an educator, which is part of how I see myself, I really love it. When I can present things to people and give them a new way of looking at an issue, you can sort of see the wheels turning until the light bulbs start going off in their heads. And it's not always a real logical process. For me, I'll be honest, without that, it is more of a process of association, a different way of looking at things. A good example is performance reviews and giving people because through constructive feedback. We tell managers not to give constructive feedback in public. Because having an audience makes the person more defensive, and sometimes even engaged in what they call face saving behavior, then we turn around the next breath. And we expect managers to give and record constructive feedback that they've given to their employees in a performance review, knowing full well that HR and other managers get to read these reviews. So how is that different from giving feedback in public, it's just an audience of the future.
Jay Kingley 17:27
I encourage all of our listeners to go to LinkedIn, look up by Dave White on LinkedIn, you get a good sense of his education, which I might personally say, I think is quite impressive, and his career and his time in various corporate positions, along with his own consulting business. But Dave, I have a slightly different question for you. I'd like to understand what's happened in your life that would most explain why you're doing what you're doing today.
Dave Wight 18:00
Jay started my career in HR as a diehard proponent of performance reviews and pay performance. And my thinking has simply developed over a very long time. But I've been unable to convince the companies that I've worked for that they need to make the radical changes in the performance management process that I think are needed. So I started my own consulting firm. Now, I'm coming in as an outsider with a unique approach to performance management, that eliminates the performance review. And for me, it's a bit of unfinished business. I'm in the twilight of my career. And I'm focusing on the area where I know I can have the greatest impact on how companies manage their people.
Jay Kingley 18:54
Dave, I think you've really provoked our thinking. I think you've given us hope there's a better way. I am sure. We have some of our listeners that are eager to reach out to you and continue the dialogue. So what is the best way for people to get in touch with you
Dave Wight 19:12
Get in touch with three either by email or phone. My email is dwhite@LPSconsultants.com. And my office number is 908-441-6217.
Jay Kingley 19:28
I have said throughout our time together on this show, how much value I think you have added how you're challenging us not to do a little bit better on this critical area of performance feedback, but to do order of magnitude, if not to better and I can assure you that every other show that I know would be so thankful for having you on as a guest but not me. Nope. Dave I'm sitting here thinking to myself, what else? beyond what you've already talked to us about? Can you do to add value to our listeners? Because they are my number one constituency. So Dave, I'm going to reach out through the internet. And I am going to twist your arm and say, how about a gift Dave? Let's up the ante would say you?
Dave Wight 20:27
I'll tell you what, Jay, I'd be, I would be willing to have some meeting probably, you know, a virtual meeting at this point in time. And we could spend up to 60 minutes and talk more about the actual process that I have and, and how I might be able to help a client we can talk about what that would actually look like.
Jay Kingley 20:53
Fabulous. Let's reach out to Dave take advantage of his gift, Dave, I want to thank you for being a guest on our show to our audience. Let's continue to crush it out there. Until next time.