Petras Gagilas

Recently I was honored by the invitation of Rostra’s editors to write a column every few months for this now digitally published prestigious magazine. This is the first column, so permit me to introduce myself briefly.

I am 59 years old, husband, father of two adult children and since last summer grandparent of a beautiful granddaughter. I studied History and Law at the Utrecht University and followed a postgraduate course in Business Studies. My early career was dedicated to the management of professional organizations – a hospital and law firms. Since 1998, I am a management consultant. In 2008 I took up my old ambition of a doctoral study, investigating person-organization fit between lawyers and law firms. The study was supervised by the Organizational Behavior group of the Amsterdam Business School and resulted in my Ph.D. thesis in 2013. During and after my doctoral research I was frequently involved in teaching activities, especially project 2 on qualitative research and in the supervision of bachelor and master theses. So I am not a Faculty member but a consultant who also enjoys academic research and education.

You might say that I know almost nothing about a lot of things. Nevertheless I might have some expertise on my two favorite fields of work. The first is the professional services firm. A large part of my consultancy practice aims at improving the performance of law firms and similar. My other hobby is HRM, notably performance management, career and compensation.

The ‘reinvention of performance management’ in a professional service firm (Harvard Business Review 2015/04) precisely hits the focus of my attention – and of many colleagues. At Deloitte, HRM is transforming the traditional annual appraisal and ratings system into a process of ongoing frequent feedback. The manager has to answer four simple questions – such as: would I always want this person on my team – and has to have a weekly feedback update with every team member. Deloitte is not the first to question the use of formal annual performance appraisals. General Electric, once the champion of rating and ranking (and firing the lowest 10 percent employees, according to the Jack Welch philosophy) already had launched a revolutionary transformation of these practices (see http://qz.com/428813/ge-performance-review-strategy-shift/). But Deloitte is the first example I know of in the global professional services.

The attraction of this new practices is understandable. Evaluating your team members ranks among the three most hated responsibilities of managers all over the world. Some researchers even give it an exclusive top position of aversion. Giving feedback that is critical, honest but at the same time acceptable and motivating is a very difficult job. So managers and employees embrace the promises of a more natural, easy and positive practice. Furthermore, our traditional performance management systems have been far from effective, as is pointed out in the article about GE’s transformation. Timing and (annual) frequency of the appraisals do not fit the need for feedback of employees. The practice of forced ranking – a manager has to rank a fixed number of employees in every appraisal category, for instance 5% excellent, 10% good, 60% sufficient etcetera – has been demonstrated to have severe negative effects. Jack Welch’ GE was famous for its forced rankings, but the practice is still widespread in many firms, especially USA and UK based. Apparently, even clear cut results of scientific research have difficulty in reaching HRM practice.

In the common, traditional appraisal system the formalities – filling in the forms  – often drive out the essence of performance management: establishing an effective (and humane) feedback relationship between manager and team members. The developments at GE and Deloitte (and many similar others) are promising approaches to re-establish these essentials. However, risks and dangers are never far away. At Deloitte, the results of the new appraisals are not (yet) communicated with the employees… to avoid bias of the manager. This seems to pervert all good intentions of the new practices. It is all about the system and collecting the data, again. An appraisal system that does not provide in telling your employee what you really think of him or her is ineffective and empty.

Further, the articles about GE and Deloitte describe that HRM is still looking for the proper method to link the new practices to objective measurements and reward decisions. These kind of measurements were exactly what the traditional systems are about. So, if we do not take heed, we might end up with a new practice that is added to the old one, missing the chance of really improving managers’ feedback. Just another phase in the ever intensifying human livestock management….

But hopefully, this forecast is too pessimistic. In that case, the reinvented performance management offers an interesting perspective for HRM, but also for research into the real effectivity of these new practices.

In my columns, I look forward to elaborate some more on this topic, on other aspects of performance management, but also on the career and management of professionals. I hope you will join me.

Maarten de Haas