Microsoft

  • Accenture Scraps Reviews, Rankings and Joins The Bounty Effect Bandwagon

    Nothing impedes collaboration more than outmoded recognition and reward systems. And replacing annual performance reviews and rankings advances collaborative culture, behavior and organizational structure.

    Many organizations promote themselves as collaborative while simultaneously reinforcing internal competition through annual performance reviews and rankings. This process squanders time and distracts the organization while pitting team members against one another. Performance reviews and rankings incent team members to hoard information and maintain hidden agendas rather than share ideas and work together towards common goals.

    Accenture is the latest major organization to eliminate rankings and performance reviews. “Massive revolution” is how Accenture CEO Pierre Nanterme characterized the organizational change as quoted in the July 21 edition of The Washington Post.

    In the Spring of 2013, Microsoft Co-Founder Bill Gates read an advanced copy of The Bounty Effect: 7 Steps to The Culture of Collaboration® which demonstrates why ranking team members falls short and how a Collaborative Reward System creates greater value than an internally-competitive system. Replacing performance reviews is the first of seven components of the Collaborative Reward Process (CRP) that I outline in the book.  In November, 2013, Microsoft eliminated rankings of team members. You can read more about Microsoft’s reward system shift in my January 20, 2014 post.

    Many legacy recognition and reward systems are based on the premise that individuals have different goals and must be motivated using “carrot-and-stick” approaches. But in a collaborative organization, people share the same goals so “carrot-and-stick” performance reviews and rankings are obsolete.

    So why do organizations persist in ranking and annually reviewing the performance of team members? The justification is weeding out non-performers and promoting “star” players, but the real reason is clinging to an outmoded command-and-control organizational structure. Remnants of this structure include not only performance reviews and rankings, but also organization charts, meetings and mission statements. These remnants inhibit organizations from maximizing value through collaboration.

    Undoubtedly, more organizations will follow Accenture, Microsoft and other major companies in replacing rankings and annual performance reviews—and in adopting a more collaborative organizational structure.

     

     

     

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  • Rank and Yank or Differentiation?

    Sometimes corporate speak or shop talk migrates from cubicles to the front page. This is exactly what happened to the terms “performance review” and “performance appraisal” last November. That’s when Microsoft eliminated its so-called “stack ranking” of team members.

    Last spring, Microsoft Chairman and co-founder Bill Gates read an advanced copy of The Bounty Effect: 7 Steps to The Culture of Collaboration®. The book shows how to change organizational structures from Industrial Age command-and-control to Information Age collaborative. Regarding performance reviews, The Bounty Effect demonstrates why ranking team members falls short and how a Collaborative Reward System creates greater value than an internally-competitive system. Ranking is essentially grading on a curve, because the organization often pre-determines which percentage of its workforce must fall into categories such as below target, target, above target and significantly above target. And grading on a curve fosters internal competition rather than collaboration. How encouraged are team members to share information and ideas if they must compete with colleagues for rankings? Not very. More likely, people will try to fake collaboration.

    Headlines regarding Microsoft’s shift include “Stack Ranking Falls Outs of Favor” in Computerworld and “Microsoft Kills Its Hated Stack Rankings” in Bloomberg BusinessWeek. Within several days of Microsoft’s elimination of stack ranking, I was on a flight from Taipei to San Francisco reading The Wall Street Journal Asia edition. And I was fascinated to see a condemnation of Microsoft’s shift and a defense of ranking team members from Jack Welch, who once was CEO of a company known for using what Welch calls “differentiation.” That company is General Electric.

    Here’s how Welch describes differentiation: “It’s about building great teams and great companies through consistency, transparency and candor. It’s about aligning performance with the organization’s mission and values. It’s about making sure that all employees know where they stand. Differentiation is nuanced, humane and occasionally complex, and it has been used successfully by companies for decades.”

    In The Culture of Collaboration® book, I describe “differentiation and affirmation.” The process is more commonly called “rank and yank,” a term that Welch considers “media-invented” and “politicized.”  One company that adopted the approach and created a star culture was Enron, which went bankrupt for many reasons.  Star culture is a hallmark of the Industrial Age command-and-control organization. Such organizations pit people against one another and hidden agendas multiply. In contrast, a collaborative organization encourages team members to work in concert towards common goals.

    Welch seems to endorse star culture in describing “feedback and coaching” as one component that makes “differentiation” work. “Your stars know they are loved and rarely leave. Those in the middle 70% know that they are appreciated, and they receive clear guidance about how to improve their performance. And the bottom 10% is never surprised when the conversation sometimes turns, after a year of candid appraisals, to moving on,” according to Welch.

    Further, Welch endorses the “bell-curve” grading aspect of “differentiation.” “We grade children in school, often as young as 9 or 10, and no one calls that cruel. But somehow adults can’t take it? Explain that one to me.” Well, here it goes, Jack. Curve grading is no more helpful to children in school than it is to organizations. Our educational systems, particularly in the United States, too often foster unnecessary competition rather than collaboration. It’s no wonder why corporations have difficulty migrating from command-and-control to collaboration. Part of the reason is that team members competed for grades in school, competed for graduate school admissions while in college, and then competed for limited grant money and fellowships while in graduate school. In particular, law schools often grade first-year students on a curve in part to limit merit scholarship awards. Eliminating curve grading in which a fixed percentage must fail is a major step towards reducing internal competition and curbing the “star culture” that complicates collaboration.

    Ranking team members is part of the broader recognition and reward process. This process typically features performance reviews, which distract organizations and waste an incredible amount of time. The Bounty Effect describes how to replace performance reviews with a far more collaborative approach. Whether we call ranking team members “differentiation” or “rank and yank,” this Industrial Age command-and-control approach has no place in an Information Age collaborative organization.

     

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  • World Bank, Microsoft Changing Structure for Collaboration

    More and more organizations are recognizing that obsolete organizational structures are impeding collaboration. I identify this issue and detail solutions in my new book, The Bounty Effect: 7 Steps to The Culture of Collaboration®.

    One of the latest organizations to begin adopting a collaborative structure because of The Bounty Effect is the World Bank. The World Bank has announced that it’s moving away from a command-and-control organizational structure that is compromising value. The World Bank will instead adopt a collaborative structure for greater speed and efficiency. The new structure will enable internal collaboration across functions, groups and regions. Plus the new structure will enhance external collaboration particularly with the private sector.

    World Bank President Jim Yong Kim announced the shift after a survey of ten thousand team members revealed a “culture of fear” and a “terrible environment for collaboration,” according to an October 6, 2013 story by Annie Lowrey in the New York Times. Further, Kim told the New York Times he feared the World Bank’s culture and structure might short-circuit its new goals of eradicating extreme poverty by 2030 and ensuring “inclusive growth.”

    The Bounty Effect for the World Bank is that the organization, which is financed by 188 member countries, faces increasing competition in supporting developing economies from many groups. One of these is the Bill and Melinda Gates Foundation. Incidentally, Bill Gates also chairs the Microsoft board of directors. In July, Microsoft announced it would change its organizational structure to reduce internal competition, curb silos and enhance collaboration. Bill read an advance copy of The Bounty Effect: 7 Steps to The Culture of Collaboration®. The book shows how to change the structure and culture of organizations from Industrial Age command-and-control to Information Age collaborative.

    Microsoft, the World Bank and many organizations suffer from similar shortcomings. While many have embraced collaboration as a concept and have even developed pockets of collaborative activity, the broader organization remains mired in command-and-control.

    Remnants of Industrial Age command-and-control compromise value creation. These remnants include 19th Century vertical organization charts, the need to go through channels, traditional meetings, and recognition and reward systems that reinforce internal competition among many others. The Bounty Effect: 7 Steps to The Culture of Collaboration® identifies these remnants and details how to replace them with infinitely more valuable collaborative building blocks.

    As the World Bank, Microsoft and growing numbers of organizations recognize The Bounty Effect’s impact on them, they can use the opportunity to implement the 7 Steps to The Culture of Collaboration® and ultimately create far greater value.

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  • The Much-Maligned Meeting and Collaboration

    The “M” word creates more outbursts of opinion than practically any other word in business.

     

    I’m referring to the word meeting. Almost everybody has a—usually negative—gut reaction to the notion of meetings. Plenty of people would prefer being stuck on a tarmac than stuck in a meeting. Even though water and snacks are often available at meetings, our time belongs to others. On the tarmac, there’s no guarantee of refreshments, but at least our time is our own. In fact, meeting-bashing has become welcome break-room conversation.

     

    Nevertheless, technology vendors have invested huge resources in meetings. So, it’s not just employers who want to load up our schedules with meetings. There are vendors with vested interests in making meetings even more integral to our work than they are now.

     

    Last night on CNN’s “Larry King Live,” Larry asked Microsoft founder Bill Gates his opinion of the Apple iPad. Gates responded, “We’re all trying to get to something that you just have to take to a meeting and use.” He added, “It still isn’t the device that I would take to a meeting, because it just has no input.” You can view the video clip here. So, one way Bill gauges the effectiveness of the iPad and similar devices is whether we will want to take them to a meeting. Bill—and by inference, Microsoft—apparently remains focused on keeping us in meetings. In reality, it’s more important whether the iPad and any similar device fits into our lifestyles and work styles than whether we’ll want to bring it to meetings.

     

    Are meetings collaborative? There’s nothing inherently collaborative about an in-person or virtual meeting. That’s right. Using virtual meeting tools is no guarantee that we’re collaborating. Joining a web conference, using telepresence or IMing the day away creates little value unless these tools fit into collaborative organizational culture and practices.

     

    If we compete with colleagues and our teams and organizations reflect “star culture”, do the tools we use make us collaborative? No. It takes more than tools to make collaboration happen. If we fill our ranks with millennials and send them to meetings with devices loaded with collaborative capabilities, will those meetings automatically become collaborative? Don’t bet on it.

     

    The biggest beef about meetings is that they’re a waste of time. In other words, they fail to create value. If we come together as a group and we’re working together to create value, we’re collaborating. So, we’ve essentially transcended the notion of a meeting and instead we’re in a collaborative session. Organizations and vendors should seek to remake meetings as collaborative sessions.

     

    In the final chapter of The Culture of Collaboration book, I note that “Today we struggle to collaborate as effectively at a distance as we do in the same room. Tomorrow the challenge becomes the reverse.” As collaborating in the same room starts seeming awkward, that’s the new frontier. But organizations and technology vendors take note: it’s about creating more value through collaboration rather than better meetings.

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