How to Improve Work for 230,000 People

The i4cp 2015 Conference features insights from leading experts and executives from some of the world's most influential companies--including Dean Carter, Chief Human Resources Officer for Sears Holdings Corporation, a Fortune 50 company that employs over 225,000 people globally and generates $35 billion dollars in revenue.

In a recent conversation with i4cp about his upcoming presentation, Carter discussed performance management and outlined the new system his team developed, with a little help from the i4cp 2014 Conference.

How does Sears use "socially-powered, data-fueled" performance management to solve business problems?

DC: Dean CarterOne of the challenges that we have struggled with--both from the business side and the HR side--is the value-add of the whole performance management process, including the development of ratings, the assessment of ratings, and the calibration process. Sears needed a performance system that definitively added value, actually improved performance, and at the same time aligned to a more dynamic goal-setting process. With these three things in mind, we built a platform that leveraged our competency in social communication and allows associates to either request feedback or give unsolicited feedback to anyone at any time in three main areas, or buckets:

The first bucket focuses on outcomes. How is the associate delivering results? This feedback addresses timely matters such as specific projects or presentation outcomes and avoids lofty "performance over the past three months"-type observations.

The second bucket focuses on leadership capabilities. Sears expects everyone to lead, so we looked at our leadership capabilities and we determined which factors drive success. Associates are evaluated against these factors to see where individual performance can be improved.

The third area of focus is around culture--which is really our values. Associates can get feedback to understand which of the culture beliefs they demonstrate most and which ones could be exemplified even more.

And then at the end of each quarter, associates review their metrics alongside the objective key results they set at the beginning of that quarter and they have check-in conversations with their managers. These feed forward conversations are based in neuroscience and include questions like:
  • "What were the results that you generated?"
  • "What skills did you use?"
  • "How did you change your approach, based on the feedback you received?"
What we really want to understand is how the feedback contributed to the results and what will be adjusted in the next quarter. As a result of this system, we didn't feel the need to have a performance rating. In fact, we thought that performance ratings were damaging and didn't believe they were creating the type of growth mindset that we wanted.

After doing this for one quarter, associates are telling us that they're changing their behavior every day, based on feedback that they're getting. Without forcing it, we have about 45% of the organization actively engaged with the system either giving feedback or receiving unsolicited feedback in some way. What we're seeing is that this engagement is driving results without HR involvement; it's really a democratized system where the associate owns the performance and the manager is just there to guide and help generate insights for improvement.

Are there any concerns with the current system?

The big missing piece at the moment is connecting the strategy to results. The data is going to tell us how the system drives results for people who are using it more or less, and what that means.

The second piece is, absent a rating, how do we handle compensation? And we're working through that as well. There's some missing pieces and we still have a lot more research to do to connect the dots, but I expect to have that information by time I present at the i4cp 2015 Conference in March.

What are the elements necessary for ensuring success with socially-powered performance management systems?

First, the system needs to be incredibly simple. The person receiving the feedback should be able to intuitively understand it and the person giving the feedback should be able to provide it easily and quickly.

The second requirement is a level of democratization in the process. It should be associate-owned versus HR-owned and there should be little HR intervention other than initial training.

The third thing is that the feedback needs to be transparent and owned. It's important that people have direct conversations and don't hide behind nameless feedback. Most feedback is personal, so if it's anonymous then you don't have that necessary texture and context.

The fourth piece of a successful socially-powered performance management system is datifying everything. Every single comment and feedback in the tool is datafied. For example, here at Sears, we track relationships--whether it's between direct reports, partners, managers, or any other combination--to understand the human behavior within our organization; it's an important piece of data.

Finally, the system has to be sticky--people have to want to use it. And we knew that people like to rate things, so we created a system where people click stars--between one and five--to produce short, Twitter-like feedback. This system is more for the person giving the feedback than the person receiving the feedback. The stars are not aggregated; there's no average star. The star rating just says, "This is feedback, here's what it is."

Why do companies struggle with performance management?

Companies struggle with performance management because of the ratings.

Because the rating itself is the Swiss Army knife of HR, it's used for everything. It's used to rank and stack. It's used for compensation. Legal uses it to determine who to layoff. The rating itself is used by so many people as a proxy for so many things that when you get rid of it and really just focus on managing performance, people don't know what to do. And so you have to put those conversations aside and say, "Let's get rid of ratings and design something that is perfect for improving performance."

We know from neuroscience and the work of David Rock that ratings are actually not valuable and not helpful, but in HR and legal, we needed them and became highly dependent on them. But when you divorce yourself from ratings, you can really get to much better solutions across HR.

Where do you see the field of social performance management heading in the next decade?

I think the nature of work is changing dramatically and there will be larger spans in controls of people who may or may not be direct employees. HR systems are going to need to mirror that.

What is the necessity of HR or a line manager needing to be involved in everything? What if you democratized systems and platforms so the individual owns it and can leverage the quantified self movement? It's sort of like creating a Fitbit for HR. I know how many steps I take; I know what my engagement level is; I know what my performance is. I get an idea of what is needed from me in my feedback and I can do some self-assessment to understand what my exact strengths and opportunities are. Then, I can self-manage my work in the same way I self-manage what I eat, how I sleep, and when I walk.

I think for the future, that's where we need to go to. The role of manager, the role of hierarchy, and the role of corporation is changing, and I think the role of HR will change. What HR will become is "how do we take these datafied platforms and get insights?"

What are you most looking forward to at the i4cp 2015 Conference?

I'm looking forward to uncovering more things in my blind spots. I had an idea of David Rock's work in neuroscience but it wasn't until I heard him speak at last year's i4cp conference--and really listened to him dive into it--that I became an evangelist for neuroscience. This revelation changed our entire system: It's changed the way we communicate in HR; it's changed how we develop people; it's even changed our senior leadership team because I've talked to them about how to lead and how to have questions generating insights about performance versus a fixed mindset versus a growth mindset.

And so that was a blind spot. I didn't know what I was going to learn until I was there and then I realized how much I was missing. That's what I like about i4cp Conferences; they help uncover blind spots. That's what I'm most excited about.

Dean Carter is scheduled to present at the i4cp 2015 Conference, March 16-19, in Scottsdale, Arizona. January 23 is the final deadline to save $300 off a standard registration and seats are filling quickly. Sign up today to avoid missing out on exclusive expert insights.