1. Why More and More Companies Are Ditching Performance Ratings

    November 24, 2015 by ahmed


    Originally posted on HBR by David RockBeth Jones

    A few years ago, I noticed around half a dozen courageous companies beginning experiments to remove ratings from their performance management systems. Companies such as Juniper and Adobe stopped giving people a one-to-five rating or evaluating employees on a “performance curve,” also known as the “forced ranking” approach. They were still differentiating performance in various ways, and still using a pay-for-performance approach, just not through a simple rating system.

    By early 2015, around 30 large companies, representing over 1.5 million employees, were following a similar path. No longer defining performance by a single number, these companies were emphasizing ongoing, quality conversations between managers and their teams.

    At the NeuroLeadership Institute, we’ve been studying this trend closely since 2011. Our interest in the topic was piqued when clients started to tell us how our research on motivation and the brain was explaining why standard performance reviews were failing. In short, we found that social threats and rewards, like one’s sense of status or fairness, activate intense reaction networks in the brain. This explained the intense reactions people had to being assessed on a ratings scale, and it also pointed to ways of designing better systems.

    The idea of removing ratings drives many HR executives a little crazy because companies love to quantify and analyze almost everything. The thought of getting rid of a metric is almost heretical. Executives who contacted us after reading our research often assumed that removing ratings was an anomaly, perhaps driven by smaller companies who don’t realize how important pay-for-performance is.

    Yet in mid-2015, the trend started to accelerate. Consulting firms Deloitte and Accenture, global health services client Cigna, and even GE—the company who popularized the idea of forcing people into a performance curve—all announced changes to their performance management systems. By September 2015, 51 large firms were moving to a no-ratings systems. According to research firm Bersin by Deloitte, around 70% of companies are now reconsidering their performance management strategy.

    This November, coinciding with our annual Summit, we will publish a full set of findings from closely studying 30 companies that have made this change. But we’ve already seen four, clear reasons the trend is gaining momentum:

    The changing nature of work. Numerical performance management systems don’t take into account how work gets done today. Who sets 12-month goals anymore? Some workers need goal cycles of one month, or even one week. Work is also happening in teams more than ever, and many people are involved in multiple teams that often are spread around the world. Few managers accurately know their team members’ performance when that employee is involved in many other teams, often doing work the manager doesn’t see or even understand. In short, standard performance reviews, delivered once a year, are just not relevant to the ways we work anymore.

    The need for better collaboration. Studying companies that have made the change, we are seeing a clear trend: conventional ratings systems inhibit collaboration, making a business less customer-focused and agile. Top ratings lead to high status, promotions, and raises—yet it’s not like at school, where everyone can get an A if they work hard enough. With a forced curve, a manager with a hardworking team of 10 people may only be allowed to give one or two of them the top rating. As a result, people directly compete with each other for rewards, hurting collaboration. As our forthcoming research will show, when Microsoft removed its ratings, employee collaboration skyrocketed.

    The need to attract and keep talent. Companies also remove ratings to get managers to talk to employees about their development more than once or twice a year. Millennials in particular crave learning and career growth. Of the 30 companies we studied, one preliminary finding that jumped out was that after a company removed ratings, managers talked to their teams significantly more often about performance (three or four times a year instead of only once). More frequent communication helps with employee engagement, development, and fairer pay, as managers better understand how their people are doing.

    The need to develop people faster. By removing ratings, early indications of our research are that companies appear to be developing people faster across the board. It’s happening because of more frequent dialogues, which also tend to be more honest and open when neither party has to worry about justifying a rating at the end of the year.

    When Deloitte analyzed their process, they found employees and managers spent around two million hours a year on performance reviews. The problem was that much of this time was spent talking about the ratings themselves. Companies that remove ratings are seeing the conversations shift from justifying past performance to thinking about growth and development. The result is better employee development, which seems to be a win for everyone.

    Companies who have replaced ratings tend to be anxious about it beforehand and enthusiastic about it afterward. Their employees are happier, which encourages more engagement and better performance. It should be no surprise that treating an employee like a human being and not a number is a better approach. Yet it has taken a few bold companies to lead the way and show us that life is better on the other side. Only time will tell how lasting the trend truly is, but I strongly suspect we are at the beginning of something big.

  2. Answering Your Questions on Work-Life Balance

    November 11, 2015 by ahmed

    Originally posted on LinkedIn by Richard Branson

    Before taking off on Virgin America’s inaugural flight from San Francisco to Honolulu to work hard and Hawaii hard, I took some time out to answer your questions on work-life balance.

    My first answers were to questions all about taking a step back, convincing management to allow working from home and encouraging leaders to take time off. You can watch them all over here, and read some tips on how to be a better boss too.

    Next up, I answered some questions about how technology has affected down-time, how to deal with guilt about flexible working, and how to educate youngsters about work-life balance. Watch the video below to see my answers.

    There will be some more video answers on the way soon, but in the meantime I thought I would answer some questions in writing too.

    Kayode Osokoya asked me: “Work-life balance is easy after the businesses are properly structured. Did you really have such balance at the start of your entrepreneurial pursuit?”

    It’s true – it takes hard work, persistence and long hours to start any new business. This was certainly the case for many Virgin companies, particularly when we were entering highly regulated industries and up against competitors that didn’t want to see us to succeed. The only way to get through those long hours is to love what you do. You have to be passionate about what you are creating and believe in the impact it will have on the world. I have always felt this way – even as a 16-year-old starting out my own magazine, Student, with just a few pennies. It didn’t really feel like work to me because it was fun and I truly believed it would have a positive impact on youth culture. When we were working out of a basement, I would always urge the team to join me outside for a walk in the park in the afternoon. We’d often come up with good ideas out in the fresh air — and sometimes end up jumping in the fountains! My advice is that if it feels like stressful, hard work, and your heart just isn’t in it, it may be time to reassess your business plans.

    Edwin Almonte asked: “How did work/life look when your family was young? A father of three, the “balance” is focused more on ensuring I’m present in my young family’s life as much as possible.”

    My family means the world to me, much more than business or anything else. I know what it’s like when work commitments take you away from family. I have never worked from an office, and worked on our houseboat in Little Venice in London when the kids were young so I could be with them. What’s more, when I travelled — whether for an inaugural flight or a meeting — Holly and Sam would often join me. Being able to spend as much time as possible with your loved ones is absolutely vital, especially early on when you have children — and it’s very promising to see more and more companies recognize this as being central to workplace wellbeing. My advice is to make spending time with your family a priority. Focus upon time management. Schedule dropping your kids at school or family dinnertime in your calendar, just as you would for a meeting.

    Dayna Kovacic asked: “Sometimes, even when I feel I’ve done a great job managing work-life balance, I come out the other end exhausted. There are still so many crazy dreams I want to realize and breathe life into. However, after budgeting time for all my extracurricular life activities and rest, which are super important and fill me up outside out of work, I still don’t have any energy to focus on innovation for my personal brand. I totally agree with your statement “there is no separation between work and life — it’s all living,” but do you ever turn off from work and non work activities completely to recharge or is it a daily practice you fit in? What’s your strategy and how do you execute it?”

    Don’t worry Dayna, I get tired too! There are some days where I step off a long flight and then go straight to back-to-back events, only to get on another long flight the next day. We aren’t the only ones — Virgin America recently ran a promotion in Silicon Valley, one of the hardest working regions in the world. We received an overwhelming response from more than 65,000 people who told us they desperately needed a break too.

    Try to get plenty of exercise. I find my nothing recharges my mind better than getting out onto the ocean and kitesurfing. I come back from the waves ready for anything. Even though I am known as Doctor Yes, it is sometimes necessary to say no in order to be more productive. Rather than join an unnecessary meeting, schedule a walk, take a yoga class, or do helps you unwind personally. I also think there’s an unnecessary reluctance to delegate tasks, which leads to people working long hours. Delegation is a great skill to have because it gives you more time to think about the big picture, while allowing someone else to grow and gain new skills in your place.

    Heidi Hanson asked: “I work from home in the wedding industry, so I have a hard time with both my family understanding when it is work time (not interrupting me when I’m in the computer or phone calls with clients); and also with clients not understanding I’m not available 24/7. How can I communicate that to both my family and clients without upsetting everyone?”

    Hi Heidi – well firstly, I think it’s wonderful that you have the opportunity to work from home. Flexible working, whereby you have control over when and where you work, can be highly effective, but I can understand your situation. Just because you work from home doesn’t mean you should be expected to work every hour of the day, but I also don’t think you should tell your clients that you’re only available from 9-5 p.m., as this is rather outdated. Instead, my advice would be to take advantage of the freedom that you have to create a schedule that works best for you. It could be that you dedicate yourself to phone calls/emails in 30-minute blocks.

    I put on my out-of-office alert when I am having family time — and leave my phone in another room. It also helps if you can keep your workspace separate from the family areas of your home — it doesn’t matter where — in fact, I’ll often catch-up on emails in a hammock, but it will help you to give your full attention to your work and ultimately be more productive.

    Do keep the questions coming, and look out for more answers soon. In the meantime, head over to Virgin America for more inspiration to Work Hard, Hawaii Hard.

  3. Zappos Says Goodbye to Bosses

    October 23, 2015 by ahmed

    Originally posted on The Washington Post by Jena McGregor

    Online retailer Zappos has long been known to do things its own way. The customer-service obsessed company calls its executives “monkeys,” has staffers ring cowbells to greet guests, and offers new employees cash to quit as a way to test their loyalty.

    The Las Vegas-based retailer is now going even more radical, introducing a new approach to organizing the company. It will eliminate traditional managers, do away with the typical corporate hierarchy and get rid of job titles, at least internally. The company told employees of the change at a year-end meeting, Quartz first reported.

    The unusual approach is called a “holacracy.” Developed by a former software entrepreneur, the idea is to replace the traditional corporate chain of command with a series of overlapping, self-governing “circles.” In theory, this gives employees more of a voice in the way the company is run.

    According to Zappos executives, the move is an effort to keep the 1,500-person company from becoming too rigid, too unwieldy and too bureaucratic as it grows.

    “As we scaled, we noticed that the bureaucracy we were all used to was getting in the way of adaptability,” says Zappos’s John Bunch, who is helping lead the transition to the new structure. The company has become a force in online shopping as it expanded beyond shoes into apparel, housewares and cosmetics. Amazon, which acquired it in 2009 for $1.2 billion but allows it to be run as a mostly independent unit, does not break out sales for Zappos.

    The holacracy concept is the brainchild of management consultant Brian Robertson, a serial software entrepreneur who says he launched the idea after realizing he was “more interested in how we worked together” than in his own job. The concept has a couple of high-profile devotees — Twitter cofounder Evan Williams uses it at his new company, Medium, and time management guru David Allen uses it run his firm — but Zappos is by far the largest company to adopt the idea.

    At its core, a holacracy aims to organize a company around the work that needs to be done instead of around the people who do it. As a result, employees do not have job titles. They are typically assigned to several roles that have explicit expectations. Rather than working on a single team, employees are usually part of multiple circles that each perform certain functions.

    In addition, there are no managers in the classically defined sense. Instead, there are people known as “lead links” who have the ability to assign employees to roles or remove them from them, but who are not in a position to actually tell people what to do. Decisions about what each role entails and how various teams should function are instead made by a governing process of people from each circle. Bunch does note, however, that at Zappos the broadest circles can to some extent tell sub-groups what they’re accountable for doing.

    Zappos and Robertson are careful to note that while a holacracy may get rid of traditional managers (those who both manage others’ work and hold the keys to their career success), there is still structure and employees’ work is still watched. Poor performers, Robertson says, stand out when they don’t have enough “roles” to fill their time, or when a group of employees charged with monitoring the company’s culture decide they’re not a good fit.

    Bunch, meanwhile, says that while people have latched on to the idea that Zappos is getting rid of managers, what the company is actually doing is “decoupling the professional development side of the business from the technical getting-the-work-done side.”

    Both also say that while the system lacks traditional managers, it does not mean that leaders won’t emerge. If anything, the goal is to get more people to take charge.

    Still, truly stamping out the corporate hierarchy may be much more difficult than it seems. Bob Sutton, a professor at Stanford’s Graduate School of Business and author of the forthcoming book “Scaling Up Excellence“, says “show me any group of five human beings or five apes or five dogs, and I want to see the one where a status difference does not emerge. It’s who we are as creatures.”

    While Sutton says that the instinct to remove as much friction and internal competition is the right idea, “creating situations where you’re clear who has decision authority is important.” Without that, he says, “you get more politics.”

    Since April, Zappos has moved 10 percent of its employees to the new system. Now that it’s official, Bunch expects that the rest of the company’s employees will transition by the end of 2014. He acknowledges that it could take up to six additional months, though, for people to fully understand its complexity. “There’s no two ways around it — this is a difficult system to grasp. We’re so ingrained in the traditional work paradigm.”

  4. When Employee Engagement Delivers Great Customer Service

    October 14, 2015 by ahmed

    Originally posted on Beyond Theory by Paul Beesley

    It’s central London. It’s 9.05 am on a Tuesday, October morning. It’s busy. I have arrived at Victoria station via the Tube. My meeting starts at 10.00 am.

    Amazingly for me I have time to kill and I need a coffee. I want to tune in to my emails and be available to take the call that I’m expecting.

    I walk past at least eight cafés and coffee points. My destination is Pret A Manger. I’ve been there before. I know that he coffee is good and the service is fast.

    I arrive at Pret A Manger and it’s heaving – people almost queuing out the door. I almost abort the idea. But I notice that the queue is moving – and moving fast. Within a couple of minutes I am at the counter and being greeted by a smiling face, wishing me good morning and asking what I would like.

    My order is taken. There are six people serving and three people operating the baristas. Everyone is smart and everyone is extremely busy. Everyone looks like they want to be there. The different coloured shirts show who does what, the teams work like clockwork. A multi-lingual team serving multi-lingual customers. Some people might even call this choreography. My coffee is served and is exactly what I expected. The price is too and I am wished a good day.

    Despite ordering a coffee to go I decided to stay a while. What I observed was fantastic. The speed at which people were being served is incredible. But the team still had time for manners. They realised what their customers wanted and the speed at which they needed it.

    Another member of the team was merchandising, making sure that shelves were stocked and easy to select from. She skillfully manoeuvred around the customers who were phoning, texting and dragging their luggage.

    From downstairs, other employees were frequently appearing, restocking the shelves with freshly made baguettes and croissants. The concept of teamwork was being displayed.

    As I look around the coffee shop the company’s vision and purpose statement was visible to see. Those working behind the counter could not miss it.

    So what did I learn from this organised chaos, this choreography? Here are my learning points:

    • Employees need to know what they’re doing. They need training to equip them to do the job they are expected to do.
    • Employees need to be clear on their roles, working in unison. To achieve this, they also need to know the roles of others.
    • Employees need to have the equipment to use, serviced and in working order. It needs to be ergonomically designed – for the employees and the customers alike.
    • Employees need to be smart in appearance and smart in attitude – courtesy costs nothing but makes money.
    • Employees need managers to give direction yet be observant to give support when necessary.
    • Employees need to see the vision and connect with how their performance impacts the business strategy.

    I could go on but I am sure you get the picture. Employee engagement and customer excellence are intrinsically linked. Congratulations to Pret A Manger for making it happen. And it’s not just happening in Victoria – I am a loyal customer to Pret A Manger in Central Milton Keynes too.

  5. 6 ways to overhaul your company’s meetings

    October 11, 2015 by ahmed


    Originally posted on Mashable by Eric Hanson

    This article is part of DBA, a series on Mashable about running a business that features insights from leaders in entrepreneurship, venture capital and management.

    Think about the last business meeting you held. Was it dynamic and engaging? Did your employees furiously scribble key takeaways in their notebooks and leave fired up about their projects? Did everyone get a chance to contribute to a meaningful discussion?

    If your meetings look like something out of an “online productivity” stock photo, then well done. For many of us though, our meeting reality looks a little more like resentful employees hunched over laptops, multitasking during a half hour of unstructured conversation. If that sounds familiar, read on.

    In the face of productivity hacks and new apps that promise to save us time, we’re often overwhelmed by one more thing to check or track, and we become distracted during all-important face-time with teams and employees. Further, many managers are simply not taught how to run meetings well.

    It’s no wonder that meetings get such a bad rap. Yet the executives in Mad Men wouldn’t have been able to come up with nearly as many potent or entertaining ideas if their brainstorms took place via messaging apps or over instant message.

    With the right mindset, meetings can be the most efficient way to make a decision and the most productive part of your day. Here are six tips for putting your meetings into overdrive.

    1. Define the purpose of the meeting and have clear, desired outcomes

    Meetings should have a clear, defined purpose, and everyone attending them should know the goal in advance. With goals in mind, employees have a sense of purpose and won’t think of the meeting as “losing” 30 minutes of their day. For example, revamp your “weekly project check-in” meeting to address specific tasks.

    Is this week’s meeting about finalizing the project timeline? Tell employees in advance, and ask them to come prepared with questions and deliverables that will help you clearly map out the project timeline by the end of the meeting.

    2. Be thoughtful of required attendees

    If the purpose is clear, it is easier to determine who really needs to be there. Does everyone on the leadership team need to come to a staffing update meeting, or just those who serve as direct managers?

    Think about who you need and who will contribute to and benefit from the meeting. Let people know if attendance is optional, or encourage those who aren’t required to attend to send notes in advance via email.

    3. Make it interactive

    Avoid monologues (and hunched-over-laptop multitasking) by requiring people to come prepared for the discussion. Include any related materials in the invite and be clear that you expect them to review information prior to the meeting. When you stop doing all the talking, you’ll be surprised how others become more engaged.

    4. Take notes and don’t forget to share them

    Many jobs move at a breakneck speed. Amid the multitasking, it’s easy to forget specific actions and next steps that come out of a meeting. It’s an obvious and crucial tip: Designate someone in the meeting to capture key decisions and action items. Designate someone in the meeting to capture key decisions and action items.

    Information-sharing doesn’t stop there, though. Notes can be quickly forgotten or only shared with the meeting leader. Make sure to share with all attendees, so people are aligned on outcomes and next steps. Well-structured notes can also quickly update those who did not attend and serve as an outline for the next discussion.

    5. Squash unrelated topics

    A good meeting should foster collaborative conversation. But, as with any good conversation, it’s easy to get off track. Keep an eye out for time sucks.

    A 2014 study by Robert Half Management Resources showed that people think 25% of the time they spend in meetings is useless. About one-third of the time, the survey adds, the agenda is thrown by the wayside.

    If you find yourself falling down the rabbit hole of budget conversations during a staffing meeting, suggest to move digression to the end of the agenda or discuss it separately.

    6. Start and end on time (or early)

    Lead by example. If you consistently start late, people will know they don’t need to show up until a few minutes after the hour. Show up early and kick things off on time. Sticking to the time frame and managing the conversation around the agenda shows people you respect their time — and sets an example so they’ll respect yours. If you can end early, do it. Your employees will appreciate a few more minutes back in their day.

    While these meeting tips may not seem like rocket science, it’s surprising how often we forget the basics and end up with meetings that don’t move us forward. Take a step back and evaluate how you run meetings and where you can improve. Chances are you can make precious face-time with your team count even more.