Guest post by Dr. David Rock, founder of the NeuroLeadership Institute and author of the best-selling book Your Brain At Work.
Every year the field of talent management goes through change as it responds to evolving market conditions, shifts in technology and changes in the nature of work. We expect 2016 to be a year of faster changes in how we think about and manage talent than we’ve ever seen before.
Here are five key predictions about talent management for 2016.
1. Rating-less performance management goes mainstream.
The evolution of performance management hit a tipping point in 2015, with a growing number of bellwether organizations publicly abandoning giving people formal performance ratings. This happened faster than most people predicted. Large companies like Accenture, Adobe, Deloitte, and GE have instead placed their bets on quality conversations as the basis for performance management (PM). By some estimates, about 10% of Fortune 500 companies have gotten rid of simple ‘1-4’ or ‘1-5’ type appraisals.
We believe rating-less performance management is in no way a fad and is instead a foundation for how companies will approach performance management going forward. According to CEB, 46% of companies plan to make a significant change to their review process this coming year.
At the Annual NeuroLeadership Summit this past November, NLI launched the first industry research paper to capture the actual experience of companies who’ve removed ratings. We conducted in-depth interviews with 33 companies to catalogue the concerns and successful practices in ditching ratings, in either pilots or definitive organization-wide shifts. A resulting white paper, Reinventing Performance Management: How companies are evolving PM beyond ratings,highlighted several clear trends, including:
- Without ratings, performance conversations are happening far more frequently, with around three quarters of companies shifting from only annual to now quarterly conversations about
- Contrary to prior concerns, pay for performance and pay differentiation are being retained in a ratings-less PM framework
- High performers are still being identified, and low performance is being managed, through maintaining an ‘in or out’ style framework in most companies
In 2016 we expect to see a lot more companies cross what we call the ‘line of courage’ to a no-ratings world, with a massive surge of companies taking this path. We also expect to see larger body of companies who made the leap just in the last two years start to innovate around other talent strategies, including beefing up how they do talent review, a big rethink on rewards and recognition, and a strong move toward implementing more agile technology strategies.
2. “D & I” becomes “I & D”
For a long time now, companies have attempted to manage D&I through measurement and accountability strategies by focusing on diversity metrics. Yet, increasing research is suggesting that diversity policies aren’t effective alone.
The trouble is, without Inclusive practices, any benefits of having a diverse population may be minimal – the improved innovation and problem solving doesn’t happen if people don’t feel they can speak up. One organization with over 60% of women in senior roles said that women feel not included as leaders. The other issue is that people who don’t feel included tend to leave organizations, creating a narrowing pool of talent as you go up an organization.
In 2016 we believe we will see a significant shift toward the Inclusion side of the D & I world. In particular, we expect to see a lot more companies trying to tackle the unconscious biases inherent in all types of decision making. While there has been a wave of unconscious bias training over the last 5 years in particular, companies are not happy with the amount of real change these efforts have driven. We see more companies asking for initiatives that squarely focus on mitigation strategies, not more education, a move to ‘Unconscious Bias 2.0’. ‘We know this is a problem, but now we want to focus on efforts that really move the needle’ is a conversation we hear a lot. New research suggests that bias is not an education or awareness problem: you can’t teach people to be much less biased, in the moment. However, it’s possible to reduce bias, if we focus on taking bias out of processes not people. Expect to see innovative approaches to tackling inclusion at an organizational level as awareness of this problem increases.
3. Leadership development will get increasingly overhauled
Companies are increasingly frustrated from returns in leadership development. While as many as 85% of companies rank leadership development as “urgent” or “important,” only 14% claim to “excellent” at developing their global leaders. Another study by i4cp found that only 50% of large organizations actually prioritize developing leaders’ global competencies, and as little as one-third describing their efforts as successful.
The challenge is that leaders have more to learn in less time, with smaller learning budgets, and yet we’re using the same organizational and professional development strategies in play for decades.
We are seeing a growing trend towards simplifying leadership development—eliminating the “model muddle” and instead developing a memorable framework for “sticky learning” to develop leaders in companies. Increasingly, we’re seeing companies turn to interactive and social learning initiatives with built-in acknowledgments of how the brain optimally learns.
We estimate that up to are 40% of larger companies are reconsidering their learning strategies and that this number will continue to grow.
4. Companies will take a fresh look at career paths
New research from CEB identified lack of future career opportunity as one of the top-three reasons globally that people are leaving the companies they work for. This seems to be an area where managers struggle. The performance demands on many managers means they have to be very focused in concrete styles of thinking about the particulars of their purview. Managers may be less comfortable with “bigger picture” thinking and having conversations about the future and unknowns. We are seeing increased interest in up skilling managers to have conversations about the big picture, not just the “here and now” and empowering managers to think more flexibly about how to support and develop people across their career.
5. More companies will embrace ‘growth mindset’ as a core conceptual framework for empowering change
In 2015, Microsoft CEO Satya Nadella publicly declared growth mindset a priority for their culture. In 2016 I believe we will see an increasing number of large companies apply the principles of growth mindset to their organization.
A growth mindset is the belief that one’s abilities can be improved and developed, that we can always improve even just a little. This compares to a “fixed mindset”, where we believe one’s
capabilities are predetermined in some way. As we will outline in a new research paper, Organizational Growth Mindset, (In press February 27th, 2016) organizations are susceptible to fixed mindsets just as individuals are. A continual focus on progress, learning and growth, instead of just an obsession about results, has been shown by decades of research now to enhance performance, and in particular help people thrive through change. We predict that an increasing number of companies struggling to help their teams be more agile will explore the principles of growth mindset in new and creative ways in 2016.
In summary, we expect a lot of changes in the talent space, and predict they will happen faster than anyone might expect, given our increased connectivity and the pressure on everyone to adapt faster.
Dr. David Rock is the founder of the NeuroLeadership Institute and author of the best-selling book, Your Brain At Work. www.neuroleadership.com. If you’re interested in more around the growth mindset topic, David is presenting a webinar on March 3 on the topic of Organisational Growth Mindset, more details here: https://neuroleadership.