Next Generation Performance Management: Interview with Alan Colquitt, Director at Eli Lilly.

Alan Colquitt is the Director of Global Assessment, Workforce Research, and Organizational Effectiveness at Eli Lilly and Company. He has spent over 30 years helping organizations implement scientifically sound and effective people and organizational practices.  He is the author of the recently published book “Next Generation Performance Management: The Triumph of Science over Myth and Superstition” and he has spoken tirelessly on how to transform performance management. Alan’s work and reputation led him to be named as one of the 100 top HR influencers of 2017 by Engagedly.

Alan, you have had an outstanding career in HR. What drove you toward Evidence-Based Management?

 I am a research psychologist so I have always relied on evidence to inform my decisions and recommendations. I wasn’t aware of an alternative until I began implementing assessment systems in organizations. I was shocked that leaders and HR professionals didn’t think they needed assessments, assuring me they could pick good talent using their own good judgement. This was my first exposure to the misplaced confidence people put in their own intuition. I encountered a similar problem with performance management. After reviewing the literature on performance management (PM), it was clear decisions about PM practices weren’t being made based on the best available evidence; the evidence wasn’t very supportive of our practices.

How, in your career, have you tried to make evidence-based people decisions?

Part of the problem with Evidence-Based Management is the way we practice human resources management in general. HR leaders generally don’t supply the best available evidence to support their recommendations for programs and program changes. You can’t get away with this in other functions. Leaders in marketing, manufacturing, or IT for example are expected to provide evidence to support their business cases and recommendations. For some reason HR gets a “hall pass.” I’ve tried to change this by emphasizing business cases grounded in data and scientific research and by evaluating the effectiveness of our HR programs and interventions.

We know that one of the sources of evidence in Evidence-Based Management is our own organizational data. To support better decisions, I created measurement systems that would supply the necessary data for business cases and assessment of outcomes. We implemented a complete employment lifecycle measurement processes and we maintain a master file of all outcome measures on every employee (e.g. performance, potential, retention, promotion). Finally, we also make behavioral science research a core part of any recommendation we make; we always use the best models, frameworks, and research to guide us.

Why in the last few years did you focus on Performance Management in particular?

In 2010 I assumed responsibility for PM in an HR reorganization. As you know, another of the key sources of evidence in Evidence-Based Management is stakeholder evidence. It became clear to me very quickly stakeholders were not happy with the our PM process; the hate mail started coming quickly. So I set out to fix it the only way I knew, starting with the science. When I learned current practice didn’t match the science, I was intrigued. If organizations weren’t guided by science, what was guiding them? This led me to look deeper at the forces maintaining the status quo and limiting change. This felt like a big mystery to me and I needed to get to the bottom of it.

What would you say are the top three myths that permeates the discussion around Performance Management?

One important myth is that supervisors can accurately evaluate the performance of their employees. Despite the lack of scientific support for this assumption, most organizations still use ratings. The best behavioral science research shows that ratings tell us far more about the people doing the rating than the employees doing the performing. Even professional judges (e.g. Olympics) aren’t immune to these problems (and temptations); what makes us think millions of amateur supervisors who do it once a year can do it?

Another popular myth is that feedback–especially continuous feedback is the secret to improved performance. A key meta-analysis shows feedback fails to help or even hurts performance one-third of the time. For feedback to be effective it needs to be framed in terms of people’s goals and objectives and it needs to be about the work tasks employees are performing. These conditions frequently aren’t being met in organizations and continuous feedback and crowd-sourcing feedback is likely to provide more of the same useless or even damaging information employees are already receiving.

Perhaps the biggest myth of all is that money along with pay-for-performance programs that radically differentiate performance and rewards motivate employees. The scientific literature in this area is extensive and complex but there is ample evidence this assumption doesn’t hold up. Money, contingent pay and high levels of pay/reward differentiation don’t generally drive high performance, engagement, innovation or retention, especially in organizations where collaboration is important.

What are the key tips you would give to organizations that want to improve their Performance Management process?

The first tip I would give your readers is to resist jumping to short-term tactical fixes. Organizations need to think deliberately about what PM can and should do for an organization. They also need to discuss up front the assumptions and beliefs they hold about motivating and controlling the performance of their employees. I would urge them to get a team of outside behavioral science experts to immerse them in the science before doing anything else.

Second, organizations need to make goals, meaning and purpose the centerpiece of PM. Traditional PM puts ratings and evaluation at the center. Purpose and meaning are far more powerful in motivating employees than money, ratings, and differentiation.

Third, organizations should focus less on feedback and more on “progress.”  The science is very clear—it is progress against goals that motivates, not feedback. Organizations should train supervisors to enable progress, with feedback being one important strategy for accomplishing it.

Lastly, organizations should put teams at the center of PM, not the individual. Collaboration and teaming are becoming more important in organizations today and research shows teams are more effective than individuals in solving the kinds of problems organizations face today. Organizations should use PM to manage and motivate individuals and teams. Employees want to be a part of something bigger than themselves and PM should be a way of making this happen.

What we have just discussed is very insightful, but is only a small part of what you share in your illuminating book “Next Generation Performance Management: The Triumph of Science Over Myth and Superstition”. What else will your readers find there?

I want readers to understand the problems with PM are deep and they are “in our heads.” I devote considerable energy to discussing the paradigms, mental models and “orthodoxies” behind traditional PM (PM 1.0) and why these must change. The world has changed but our thinking about PM is still firmly rooted in the early 1900’s. Real change to PM must start by replacing our old mental models with new ones.

This book also gives readers the benefit of my extensive review of the research in this area. I hope readers come away with better understanding of the scientific case for abandoning current practices and adopting new practices. There are over 40 pages of references in the endnotes and I could have included many more. It is important that readers know this evidence is there, even if they don’t read it all themselves. Many books say their recommendations are based on science but they don’t show you much of the actual science.

Finally, I give readers a way to fill the void left by abandoning traditional practices. It is scary for organizations to give up performance ratings for example. How will we pay people? Promote people? I give readers practical answers to all of these questions. I reassure them there can be life after PM 1.0. And now that I’m retiring from Lilly at the end of the year, I will have more time to help other organizations make the move toward PM 2.0!

Alan, thank you so much for what you have been and are currently doing for the HR profession by promoting good practices based on solid evidence, especially in the Performance Management space where so many myths and fads are still going strong.

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