ABOUT THE NLI

Building a new language for leadership since 1998

©2016 NeuroLeadership Institute | 2

THREE PRACTICES

Performance Diversity Learning Transform performance by

lifting the quality of conversations

Enhance diversity and inclusion by breaking bias

Accelerate and embed new behaviors through brain-

based strategies

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KILL YOUR RATINGS

PERFORMANCE MANAGEMENT CONTINUUM

Coach Coaching and development Frequent conversations Shared responsibility Enterprise contribution Minimal paperwork Growth mindset Manageable threat

Performance Scores No Performance Scores

Forced Ranking

Ratings Based on quantitative

results (i.e. 1-5)

Structured

conversations

Guided conversations

From:

Judge Competitive assessment Annual event Top down Individual contribution Significant paperwork Fixed mindset Overwhelming threat

To:

The

line

of

cou

rag

e

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WHY THIS IS HAPPENING

6 ©2016 NeuroLeadership Institute |

1. Poor return on effort

2. Not keeping up with how work is done today

3. Disengaging many good people

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

5

3-4

2

IMPACT ON ENGAGEMENT

©2015 Eli Lilly and Company | September 8, 2015

Illustrative

Deliver Rating, Pay Adjustment, Bonus

85%

15%

COMPANIES THAT HAVE MOVED OVER TIME

1 2 2 3

8

13

24

41

55+

2007 2008 2009 2010 2011 2012 2013 2014 2015

Companies who have removed PM ratings

©2016 NeuroLeadership Institute | 8

REINVENTED PERFORMANCE MANAGEMENT

EVEN WITH ‘NO RATINGS’, COMPANIES STILL:

10 ©2016 NeuroLeadership Institute |

1. Maintain a pay-for-performance culture

2. Differentiate compensation

3. Track lots of data about people

4. Deal with lowest performers

THREE ‘MUST DO’S

1. A framework to ensure more regular conversations happen

2. Future focused conversations

3. Good change management (especially manager capability)

THE HEART OF ‘MANAGER CAPABILITY’

1. Foster a Growth Mindset for continual improvement

2. Minimize Threat to have candid and honest conversations

3. Facilitate Insight for people to positively embrace change

GROWTH MINDSET

We grow more

when we believe in

change.

Leaders are born or made?

Hoyt, Burnette, & Innella (2012)

Will Power

Job, Dweck, & Walton (2010)

Nature vs. Nurture

Sir Francis Galton (1874)

Tabula Rasa

Aristotle

Neuroplasticity

Bach-y-rita (1969)

Self-efficacy

Bandura (1977) Learned

pessimism/helplessness

Seligman (1990)

Free Will

Vohs and Schooler

(2008)

Fixed mindset

• We have skills we just can’t get better at

• Effort doesn’t help

• Feedback is dangerous

• Stretch goals are bad

• Other people’s success de-motivates

Growth mindset

• We can get better at most things

• We can change

• Effort is central

• Feedback is helpful

• Stretch goals are good

• Other people’s success inspires

The two mindsets

Prove yourself Improve yourself

Look good Get better

The SCARF® Model

Away

Threat

Toward

Reward

Status

Certainty

Autonomy

Relatedness

Fairness

Rock (2008)

RATING-LESS REVIEWS: THE PIONEERS

Sector

N = 52

PHILOSOPHY: RE-BRANDING

“Check-in” “Talent Matters” “Compass” “Performance Acceleration”

“Real Talk, Real Results”

“Success Matters” “My Career” “P2P” (Passport to

Performance) “Connect for

Growth”

“VIP” (Valuing Individual

Performance)

“GPS” (Grow, Perform, Succeed)

“Enabling Your Potential”

“FIT” (Focus, Innovation, Training;

Keeping Fit)

“AIM” (Accelerate, Inspire, Motivate;

AIM for Greatness)

“Performance Enablement”

90% of companies rebranded their performance management process

DIALOGUE: FREQUENCY

100% increased the recommended frequency of conversations

76%

18%

6% 8%

24%

68%

Annual Bi- or triannual Quarterly or more

Before/after conversation cadence

Before After

PHILOSOPHY: DOCUMENTATION

TRENDS: EVALUATION

Evaluative

EVALUATIVE VERSUS DEVELOPMENTAL

Developmental Belief

Reality Evaluative Developmental

EVALUATIVE VERSUS DEVELOPMENTAL

Fear

Reality

Developmental Evaluative

Developmental Evaluative

Phase 1: Philosophy

Phase 2: Quality conversations

Phase 3: Change management

12 STEPS TO CHANGE

1. Build the business case for change

2. Identify 3 strategic objectives for PM

3. Define the new mindset

4. Rebrand performance management itself

5. Define and brand each element of the cycle

12 STEPS TO CHANGE: PHILOSOPHY

6. Identify the number of types of conversations

7. Process map “quality conversations”

8. Build simple learning aids

9. Build learning strategies that embed habits

12 STEPS TO CHANGE: QUALITY CONVERSATIONS

NEUROSCIENCE HELPS IMPROVE LEARNING ITSELF

Only 13% of companies take into account how

we learn when designing learning strategies.

28

10. Tie into cultural issues

11. Involve wide stake holders

12. Get the timing right

12 STEPS TO CHANGE: CHANGE MANAGEMENT

IS REENGINEERING PM WORTH IT?

88%

12%

Yes Too Early to Tell No

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N = 25

DATA THAT REENGINEERING PM IS WORTH IT

1. Employee feedback via survey

2. Increase in employee engagement

3. Time saved from changing unproductive process

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BREAKDOWN OF CHANGES REPORTED

• Conversation Quality • 64% Positive Change

• Employee Engagement • 59% Positive Change

• Conversation Frequency* • 54% Positive Change

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• Pay Differentiation • 41% Positive Change

• Talent Retention • 19% Positive Change

• Employee Turnover • 17% Positive Change

*Conversation Frequency: 13% (1 company – within year 1) reported seeing negative change

Note: Results displayed range from 50-85% of companies tracking data “No change” indicated if no positive or negative change otherwise shown

POSITIVE CHANGE BY YEAR OF TRANSFORMATION

• Conversation Quality

• 50% (year 1) 67% (year 2)

• Employee Engagement

• 50% (year 1) 63% (year 2)

• Conversation Frequency*

• 50% (year 1) 50% (year 2)

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*Conversation Frequency: 13% (1 company – within year 1) reported seeing negative change

Note: Results displayed range from 50-85% of companies tracking data “No change” indicated if no positive or negative change otherwise shown

WHAT WE RECOMMEND

1. Tackle the project thoughtfully

2. Rebrand the whole process

3. Focus even more on goal setting

4. Define ‘quality conversations’ clearly

5. Track conversations happening and the gist of them

WHAT WE RECOMMEND

6. Invest in manager capability

7. Keep doing pay for performance, but simplify it

8. Separate comp from development conversations

9. Manage true lowest-level performers differently

10. Increase talent reviews

REINVENTED PERFORMANCE MANAGEMENT

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