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       Hazards 123, July-September 2013
The new normal: Performance Management and the New Workplace Tyranny
A managerial offensive is taking place at work. Professor Phil Taylor of the University of Strathclyde Business School explains how a government blitz on employment rights and welfare, driven by a spurious austerity argument, is being mirrored in a new workplace tyranny and a massive intensification of work.

In tandem with the government’s dismantling of employment rights, a managerial offensive is taking place on the front line of work.  If the financial crash of 2008 and the continued state of perma-recession have given the government the spurious rationale for austerity and the blitz on welfare, they have also provided an ideological justification for a massive intensification of work.



SHOWING WORKERS THE DOOR
Professor Taylor’s  three-year study for the Scottish Trades Union Congress (STUC) found Performance Improvement Plans were frequently less about providing the coaching and support needed to help employees improve but were used for 'performance managing' people out of the door.  “The speed of these 'managed exits' is astonishing - in two case study organisations it was only 12 weeks between being put on an improvement plan and then being exited,” he said. [more]

The reality today for very many workers is acute insecurity, intolerable pressure and mental ill-health. Although this offensive has several distinct elements, notably lean working, performance management and sickness absence management,1 these are often experienced seamlessly by workers as an integrated assault.

Many routine white-collar and clerical, service and manual workers are affected, but so too are technical, higher administrative and professional staff, who are not immune from the debilitating effects of micro-management and harsh performance discipline.

Driven by obsessive cost-cutting imperatives, organisations are establishing a ‘new normal’, a radical recasting of the employment relationship. The managerial watchwords are ‘doing more with less’, where equivalent or larger volumes of work are undertaken by smaller numbers of workers. The outcome is an unprecedented intensity of effort and labour and the closure of the ‘porosity’ of the working day or night. As managers minimise the gaps between tasks, during which the brain and body recovers in order to undertake the next task or phase of work, work becomes an unrelenting struggle.

Lean and mean



BOTTOM LINE  When a manager places a cabbage on your desk, you should be worried. Workers have been labelled as vegetables, ‘muppets’ and ‘bottom feeders’ in a destructive performance management system that requires large groups of workers to be rated as “underperformers”.

The re-engineered workplace is extending beyond manufacturing, to encompass clerical work, interactive servicing and the public sector. As in the auto industry before it,2 this lean working drive has brought narrow tasking, stress, bullying and lack of voice.

The combination of unremitting intensity, insecurity and claustrophobic control and coercion is now characteristic of work across the economy. From the building site to the hospital, from the class or lecture room to the lorry ca or the social work department, from the food factory or retail outlet to the call centre, employees of all grades and types experience this toxic combination.

‘Consultemics’ use their university positions to deliver the uncritical ‘studies’ that justify lean’s implementation,3 with a cavalier disregard for its worker victims. By contrast, rigorous research reveals lean’s brutal consequences,4notably the causal relationship between work intensity and task fragmentation, and the prevalence of ill-health, particularly stress.

What is taking place is not some transient change, contingent upon a turn of the business cycle, but a redrawing of the political-economic and organisational landscape, in which new structures of profit maximisation and budgetary restriction are imposing extreme disciplines on workers. Pivotal to what, without hyperbole, is a ‘new workplace tyranny’, is Performance Management (PM).

Performance management

The mainstream human resources management literature claims that PM is a systematic process for improving effectiveness by aligning individual employees with organisational objectives. The texts describe (and prescribe) PM as developmental, with employees incorporated “within an agreed framework of goals, standards and competency requirements.”5 These assumptions of mutuality, shared goals and joint decision-making also pervade company policies and employee handbooks.

Set against the real-life evidence of claustrophobic control, micro-management and the unilateral imposition of harsh discipline, this academic and company ‘discourse’ appears positively Orwellian.

The particular noose on working time is tightening all the time. They are plugging even the smallest holes in the working day. Controls manifest themselves in a series of alerts to engineers and managers target them on how quickly they respond – why is an engineer in a place when they should be somewhere else or why have they not moved within a certain period of time… the guy in the field is constantly being phoned up and asked what he is doing.
CWU Regional Officer

Performance appraisal (PA) or review is a key element in the PM cycle, central to ranking and rating employees, targeting underperformers and determining performance related pay (PRP). PM has extended beyond appraisal as an annual ritual. PAs are now typically six-monthly or three-monthly and cover many more categories of employee.  It has expanded in scope and aims to knit together individual goals, departmental purpose and organisational objectives in overarching fashion.

PM is not now periodic and retrospective but continuous, both backward and forward looking, with a profound disciplinary content. The real bite for workers from PM lies in Performance Improvement Plans (PIPs), or their equivalents, imposed on those judged underperformers.

The evidence confirms that the watershed in PM pre-dated the financial crisis of 2008, although the recession subsequently provided the justification for organisations to accelerate existing programmes. To give one example, a union officer with the National Australia Group, which in the UK includes RSB, Yorkshire Bank and Clydesdale Bank,reported that historically “most people were put in the Fully Competent bracket without much discussion about how they had performed,” but that changed from 2006-7 when detailed scrutiny of performance was initiated. 

The evaluation of individuals depends on the micro-measurement and micro-management of quantitative and qualitative individual performance. The former derive from Key Performance Indicators (KPIs) determined strategically. As senior management position their organisations within their particular competitive markets or, in the public sector, conform to budgetary constraints, overall targets (often Service Level Agreements) cascade down through (de-layered) tiers of management to front-line managers (FLMs) or team leaders (TLs), and then to individual workers.

Permeating organisations is this obsession with ‘measurables’, ‘metrics’, ‘stats’ and ‘deliverables’. The evidence from financial services and telecoms is that these targets were first used systematically in call centres, made possible by its information and communication technologies (ICTs), then spread to the increasingly digitalised back office. They have subsequently become universally applied across functions. 

Targets form inflexible links in chains of command and control. FLMs or TLs frequently justify their actions by referring to their lack of discretion. Given the controls upon them, they cannot be flexible or lenient towards underperforming workers.

If they can’t get you for your targets and your sales… for the measurables, they can always get you, if they want to, through the behaviour rating. Does not show a good attitude in team meetings or celebrate team achievements is always handy. Doesn’t have a clean desk – gotcha!
Unite rep, Banking seminar,
4 September 2012
  

In the worst cases, managers are given targets for the numbers of workers under their control who should be underperforming, put on sickness absence management actions or “exited” out of the organisation. Should they fail to meet these targets, the managers themselves will be judged to be underperforming.

Alongside escalating quantitative targets is the widespread imposition of qualitative sanctions, including the evaluation of employee ‘behaviours’ and ‘attitudes’. If the ‘objectivity’ of quantitative targets are managerially-constructed numbers of no scientific validity, then the evaluation of ‘behaviours’ and ‘attitudes’ are even more open to the charge of subjectivity and arbitrariness, described by a regional officer of the union CWU as “leaving people vulnerable to the whim of a supervisor.”

The Bell Curve

The most insidious element of PM according to union and worker testimony is the Bell Curve, or forced distribution, by which employee performance is ranked according to pre-determined percentages. Typically, five categories, ranging from A to E or, in reverse order, from 5 to 1, are composed of, for example, ‘excellent’, ‘exceeds expectations’, ‘meets expectations’, ‘does not meet expectations’ and  ‘unacceptable’. In three of the banks studied, the percentages of these categories were 5, 10, 60, 10 and 5 respectively.

Some organisations claim not to use the Bell Curve, yet the evidence indicates otherwise. The CWU surveys its BT membership annually and the responses of almost 10,000 who supplied data on their performance ratings reveal a near perfectly symmetrical distribution.6 Where organisations do admit to using the Bell Curve they state that it was for indicative and not disciplinary purposes.

Workers’ experience is of huge insecurity due to forced distribution, whether indicative or not. Not only has the pressure on underachievers intensified, the criteria constantly changes, capturing ever larger numbers.

In three organisations, employees in the ‘needs improvement’ category were, at a stroke, deemed to be seriously underperforming through a statistical adjustment.

Respondents report another way in which ratings fail to match performance. Organisations operate a process, described variously as ‘levelling’, ‘calibration’, ‘moderating’ and even ‘grandparenting’. Managers or team leaders with responsibility for attributing scores to their team members meet with their senior managers ostensibly in order to maintain consistency and fairness.

The language is quite specific.
‘You have not achieved, you are an underachiever’. Over and over again. People are being marginalised, criticised for letting people down, letting the team down, letting the bank down. Underneath it is the Bell curve despite the protestations of from the higher echelons, by which only a small percentages are rated as below achieving. They state that they use it for indicative purposes, but it is applied absolutely and to the letter.
Unite rep, Royal Bank of Scotland

However, the objective is to ensure that scores are not inflated and that the a priori categorisation of percentages is adhered to. The fundamental reason, at least for those organisations with PRP, is to guarantee that the fixed pots of money to be allocated to pay awards is not exceeded. Moderation prevents score inflation by TLs/FLMs and is designed to increase their control over workers. A Unite rep in an insurance company noted: “It is always levelling down, never up, and makes a mockery of fairness and reward for performance.”

 

Ranking and yanking

The extent of “underperformance” is remarkable. The CWU BT survey showed that 8.5 per cent had been on a PIP in the last 12 months, a designation that involves a formal warning. A Prospect survey of 4,000 managers revealed that 33 per cent of respondents had received a ‘Development Needed’ or ‘Unsatisfactory’ rating in at least one quarter in the 2012/13 performance year.7 In the National Australia Group it was reported that 10 per cent of their UK bank workers were on performance actions in 2011.

If your name’s up on the whiteboard, there will be emails going round saying who is performing badly and who is performing well, who is red, amber, green that sort of thing, so the pressure is very intense and it really does affect people badly. 
Unite National Officer

While the ease and speed with which workers can be ‘managed out’ – fired - differs between organisations, unions agree that the volume of such cases has grown. RBS appears typical in that “from the day of signing an action contract to out of the door can be as little as 12 weeks.” The suspicion is that what lies behind ‘managed exits’ is a deliberate organisation policy to remove a certain percentage of the workforce each year. ‘Ranking and yanking’ has been assimilated as a desirable management practice by many organisations.

The stark picture to emerge is of organisations using (manufactured) poor performance ratings to put increasing numbers of workers on PIPs and to pressurise them – directly or indirectly – to sign such agreements and to accept minimal payments to leave. Organisations reduce headcount while avoiding redundancy procedures and possible exposure to employment tribunals. A workplace rep in Lloyds Banking Group summarised the choice confronting underperformers: “You can leave quietly now with a sum, or leave later with nothing and a bad reference.”

Unions report that PM and its attendant practices and outcomes are discriminatory. Women, it is perceived, are more likely to receive lower ratings and to be put on development plans. Older workers have been more vulnerable to the harsher performance requirements and to corrective actions.  Internal confidential documentation from other organisations studied confirms the targeting of older workers for “managed exit.”

The Prospect survey of members and non-members at BT concluded that Development and Performance Ratings (DPR) were much lower for those from a minority ethnic group and those with a Disability Discrimination Act (DDA) impairment. Such discrimination also applied to older and part-time employees.

A vicious two-pronged cycle

Unrelenting work intensity and the insecurity caused by fear of the consequences of underperforming induce profound pressure and cause deep anxiety.

In one organisation cabbages and cauliflowers had been placed on the desks of ‘underperformers’. In another, they were constantly referred to as ‘bottom feeders’ or ‘muppets’, which one Unite rep said “just reinforced that sense of hopelessness that they were not up to the job”.

The outcome frequently is a vicious circle. A worker gets a poor performance ranking and it affects their confidence. They are put on a PIP and they believe that they have been targeted. Stress might follow and they go off sick. When they return to work, often prematurely, they are in ‘a two-pronged cycle’, facing warnings over their performance and sickness absence triggers. The resultant pressure compounds their insecurity making them even less likely to make the improvements the performance managers are demanding. The result can be acute mental ill-health with the threat of capability dismissal looming.

It’s a hell of a background to try to work against. ‘If I don’t do this then I will get the sack’. My experience has been that people are too busy worrying and looking over their shoulder to make the improvements that companies are insisting on…there have been plenty of instances where individuals have been shoved over the edge as a direct result of the pressures put on them.
CWU Regional Officer

Some initial findings of the recently published Workplace Employment Relations Study seem bizarre, in that they report increases in job satisfaction and autonomy since 2004.8 The emergence of Performance Management as a key aspect of the contemporary workplace appears not to have been included in the purview of this government report.

The appalling pressures being inflicted on workers in the ‘new normal’ of the reconfigured, downsized and super-lean workplaces of the era of crisis, austerity and recession have been laid bare. Performance Management is pivotal to these emerging regimes, causing widespread insecurity, intense pressure, stress and ill-health.

The report of a three-year study commissioned by the Scottish Trades Union Congress in 2009 and published in 20139 and the evidence cited in this article draw mainly upon unionised workplaces. If the situation can be bad in unionised workplaces, it is going to be worse in non-union environments. These more vulnerable workers will be exposed to a far greater extent by the tyranny of PM, making the case for their unionisation and organisation even more compelling.

 

References

1 Taylor, P., Newsome, K., Cunningham, I. and Scholarios, D (2010). Too scared to go sick’ – Reformulating a research agenda on sickness absence, Industrial Relations Journal, 41.4, 270-288.

2 Stewart, P., Murphy, K., Danford, A., Richardson, T., Richardson, M. and Wass, V. (2010) We Sell Our Time No More’: Workers’ Struggles Against Lean Production in the British Car Industry, London: Pluto Press and related journal article.

3 Radnor, Z. and Bucci, G. (2007) Evaluation of Pacesetter Within HMRC Processing, HMRC, London

4 Carter, R., Danford, A., Howcroft, D., Richardson, H., Smith, A. and Taylor, P. (2013 forthcoming), Workers’ experience of occupational ill-health in lean clerical work, Work, Employment and Society, 27.5 

5 Armstrong, M. (2009) ‘The process of performance management’, in Armstrong, M., A Handbook of Human Resource Management Practice: 617-638 [contents]

6 CWU (2013) BT Membership Survey, London: CWU and related news release

7 Prospect (2013) Performance Management System in BT – Prospect’s 2013 Survey, London: Prospect [also see survey form]

8 Van Wanrooy, B., Bewley, H., Byron, A., Forth, J., Freeth, S.. Stokes, L. and Wood, S. (2013) The 2011 Workplace Employment Relations Study-First Findings, London: ESRC/ACAS/NISRC

9 ‘Performance Management and the New Workplace Tyranny’ Report, Professor Phil Taylor, January 2013 • Executive Summary. STUC news release.

 

 

Showing workers the door

In 2009, the Scottish Trades Union Congress (STUC) passed a resolution on Performance Management, proposed by the Communication Workers Union (CWU) and Unite’s financial services sector, committing the STUC commission a research report to examine the effects of Performance Management (PM) on workers.

The original objective was for a report based on desk-based research. However, scrutiny of mainstream human resources management (HRM) literature revealed there had been a failure to consider the consequences of PM for workers, let alone to investigate potential negative consequences for their health and well-being. Study author, Professor Phil Taylor of the University of Strathclyde, was compelled to broaden the inquiry to include lean working, work intensification and changes in the employment relationship, reviewing diverse reports.

He says since knowledge was lagging behind ‘real-world’ developments it was necessary to undertake primary research. Between 2010 and 2012, extended interviews were conducted with 24 union reps and officers mostly, but not exclusively, in financial services and telecoms. Additionally, the author attended 31 union conferences and seminars at which PM was a major agenda item. Comprehensive company documentation covering 2009-2012 was analysed for five banks, three insurance companies and two telecoms companies.

The results, published in January 2013,9 identified  the “relentless pressure” of punitive performance management systems intended to push up productivity. The study found it was creating a stressed, sick and insecure workforce and the “unrelenting intensity” of work generated under new forms of performance management was having a significantly negative impact on employees. It was being used as a cut-price way to push 'under-performers' out the door.

Professor Taylor said “the widespread experience of employees is of top-down, highly-pressurised and intensified work, with most facing an array of often unachievable targets. Workers are being increasingly tightly monitored and measured and then placed into performance appraisal categories. Frequently, these are in pre-determined distributions - sometimes known as the Bell curve - with a certain percentage deemed to be underperformers, irrespective of the level of actual performance.”

He added: “This is when the problems really begin for employees, because 'underperformers' are then put on improvement plans, sometimes known as PIPs, which can cause huge anxiety and stress because they can be almost impossible to get out of. The evidence is that these PIPs most often are not about providing the coaching and support needed to help employees improve but are for 'performance managing' people out of the door. The speed of these 'managed exits' is astonishing - in two case study organisations it was only 12 weeks between being put on an improvement plan and then being exited.”

Grahame Smith, STUC general secretary, commented: “The sad truth is that far too many people in Scotland encounter fear and intimidation in the workplace on a daily basis; rising incidence of stress and other mental health problems is the inevitable result.”

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The new normal

Hazards 123, July-September 2013

Contents

Introduction
Lean and mean
Performance management
The Bell Curve
Ranking and yanking
A vicious two-pronged cycle
References

Related story

Showing workers the door

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Stress
Work and health