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Performance and promotion evaluations

22/01/2024 by Alberto Pezeiro Two of the most important processes in the development of an organization's current and future leaders are performance evaluation and talent promotion (which I will take the liberty of referring to in this article as "promotability," an Anglicism for promotability).
A good analogy to explain these processes is driving a vehicle on the streets. The performance evaluation process is like looking in your car's rearview mirrors, backward and with a limited horizon (for example, during a fiscal year). The process of promoting talent, on the other hand, is like looking through the windshield of your car, forward, with a broad view of the future (where I want to be in the coming years).
In the first article in this series on Leadership Development, I described a mental model for creating T&D programs that cater to professionals at all stages of their careers. In the second edition, I discussed strategies for prospecting new leaders and creating a succession structure that meets the company's long-term needs. 
Here, I will explore the importance of employee performance and promotion evaluation processes as tools for developing an organization's current and future leaders.

 






















Performance evaluation: a development commitment between leaders and subordinates

The evaluation process is a continuous cycle between leader and subordinate that lasts throughout the fiscal year, but which usually intensifies and becomes more formal in the last two months of the respective year (or in the first two months of the following period).
There are several ways to conduct this process, but, as a rule, the points evaluated are as follows:
•     Performance: ability to deliver on agreed goals and objectives and deal with adversity with leadership and responsibility;
•    Values: professional image, in terms of how they deliver on their goals and objectives in line with the organization's values, principles, and vision;
•     Unique skills: highly valued in organizations where certain technical skills are required and possessing them sets professionals apart;
This is a process that demands time and energy from both parties involved. When designing the process and its main activities, the company must seek a balance between having a robust process that is also lean and non-bureaucratic, so that everyone can give their best when carrying it out (and not look for shortcuts or ways to circumvent it).
Throughout the annual cycle, the frequency and formality of evaluation conversations should be adjusted, always seeking to focus on the evaluated professional's ability to deliver what the company is looking for at that moment, while maintaining behavior that is appropriate to the organization's values.
The final rating scale can be adjusted as each organization sees fit. It is quite common to use a 3-level scale:
•    Talent: professionals who stood out in the areas evaluated and deserve special attention with regard to their retention and immediate placement in positions of greater responsibility;
•    High Value: professionals who are performing their duties adequately and for whom constant development should be sought;
•    Less efficient: professionals who must be informed, in a frank and transparent conversation, about their performance and/or value gaps, and for whom a short-term development and monitoring plan must be formalized in order to make them valuable to the organization. This monitoring should be done in a positive manner, demonstrating that the organization believes in their potential and, for this reason, is investing time and energy in order to help them recover, believing that this is a temporary and reversible situation.

Compensation and bonuses based on performance evaluation

Many organizations base part of their compensation, raises, and bonuses on the previous period's evaluation process.
This is a good practice that depends heavily on the corporate culture and the organization's "Salary and Benefits" strategy.
It is important to remember that the more aggressive the performance-based bonus strategy, the greater the likelihood of creating a competitive environment within the organization, tending to benefit professionals who performed better in their evaluations during a given period, while those who received lower performance evaluations may feel discouraged from continuing as members of the organization. 
It's all about agreeing on the rules of the game, being transparent, and training the people involved so that the process is conducted in the most correct and fair manner possible.

The famous (or infamous) forced curve

For a period of time, a large number of companies adopted the "forced curve" principle, which made it mandatory for each leader to rank their subordinates according to a minimum percentage of people in each evaluation category.
At GE, in the late 1990s, when I was in charge of governing these processes in the company's corporate area in Latin America, we adopted this practice, which was well understood internally but caused a lot of noise and misinterpretation to those looking in from the outside. 
The main idea was to force management to identify those professionals who truly stood out and deserved to be directed toward training and opportunities that would maintain their high level of performance. At the same time, it forced them to identify those who did not perform well and who needed time and energy to be invested in their development.
The myth that anyone who fell into the "poor performance" category would be fired was not true. The idea was precisely to warn as early as possible that this person had not performed well and that the company would invest in their recovery.
On the other hand, in a situation where there was a need to reduce the workforce or a tendency to repeat low performance evaluations, this made the professional a "natural candidate" for dismissal. The idea was that this person would never be caught off guard and, if the process worked well, they would have time and goodwill from the organization to recover.

“No brilliant jerks” 

The above quote is often attributed to Netflix CEO Reed Hastings. It refers to how to deal with those people who are constantly seen as capable of delivering, and often exceeding, their goals and objectives, while at the same time being the "counterexample" to the organization's values and principles.
It is tempting to pretend that we do not notice the wrongful behavior of these people, since they may be very important to the performance of the business, but the truth is that the longer we keep these people, the more we contaminate the behavior of others.
You have to be brave and think long term, especially about the culture you want to create and perpetuate. I agree with the CEO of Netflix on this point:
No brilliant jerks. Or rather, no jerks! No second chances!

Promotability

The likelihood of a professional being promoted depends on a number of factors, some of which are beyond their control, such as: the number of opportunities available, macroeconomic conditions, unfavorable corporate culture (e.g., promotions based on length of service, which end up disadvantaging younger employees), among other possibilities.
On the other hand, many companies place great emphasis on two main factors when considering promoting a professional:
•     Performance evaluation history and trends over the years. A history of consistently good performance evaluations or a reversal of poor performance that has been ongoing helps increase a professional's promotability. 
•    The professional should exemplify the leadership profile expected for the organization over the coming years. It is the concept of looking through the windshield of a car.

Among the factors under a professional's control that can increase their Promotability, there are three key elements, represented by the acronym PIE (an acronym widely used in GE Leadership training):


 






















Performance: ability to execute, leadership, ability to implement organizational changes alongside short-term responsibilities, and commitment to decisions made by the company;
Image: this is your personal brand, i.e., the impression you make on other people in the organization. It means being original and natural, not looking like a corporate character. It means having emotional intelligence, influencing through admiration, and being seen as a good facilitator.
Exposure: making yourself known (and recognized) throughout all areas of the organization, contributing to multi-departmental projects, participating in training and corporate events, and representing the organization appropriately when in the presence of external agents (customers, suppliers, press);
The professional can work over time with their leader (or a mentor) to identify gaps and develop themselves to have a balanced PIE.

Most importantly, develop the notion that you are primarily responsible for your career development. Do not place yourself in the role of victim and/or hold the company, HR, your immediate superior, or any other external agent responsible for your professional growth. You are the result of the decisions (both good and bad) you have made throughout your career. 
Focus on changing what you can control and don't let yourself be affected by what you can't do anything about.
The role of HR and T&D

The human resources and training and development departments should work to: 
•    Make processes more robust and less bureaucratic. 
•    Provide tools that facilitate the work of managers in the performance evaluation and promotion process.
•    Ensure good governance of these processes and tools 
•    Fine-tune assessments and participate in promotion discussions 
•    Ensure that evaluations and promotions are aligned with "hot topics of the moment."
•    Digitization and simplification of the process to minimize the time spent by leaders on conducting evaluations.

Conclusion and the role of current leaders

The role of HR in governing processes and tools is fundamental, but the key to the success of a performance evaluation and promotability initiative is the engagement of current leaders and their involvement in all stages of the process.
At GE, in the late 1990s, the evaluation and promotion process was internally referred to as Session C. It was the backbone of the organization's leadership development machine.
Based on the process, which was continuous and occurred at all levels of the organization:
•    We defined which Corporate University training courses we would bring to the organization that year and, based on business performance evaluations, who would participate in them 
•    We used the Six Sigma Program to conduct a "Leadership pilot" with people who were about to be promoted but needed to be tested in Organizational Transformation activities;
•    We defined part of the variable remuneration and salary increases;
•    We identified the people who needed to improve their performance and who would undergo the Individual Development Program (IDP);
All of these processes involved the participation of senior leadership. Participating in the Session C process was essential for the organization's leaders to demonstrate alignment with one of our core corporate values—the development of current and future leaders. 
Excelling in this area was a major career accelerator. It was not uncommon for people, such as former GE CEO Jack Welch, to say that they spent up to 50% of their time and energy throughout the year working on people development.