An uproar arose over the evaluation of Nokia’s employees: Now an expert who knows the “destructive system” is speaking

Nokian the new evaluation and reward system he designed caused an uproar. Then the company said it changed it. Why would the planned system, i.e. forced classification, be disastrous for Nokia or any company?

It’s about human psychology, about which there is solid psychological and brain research data, says the expert. Everyone who does evaluations or is evaluated should be familiar with this.

“From this millennium and from the last few years there have been dramatic findings about what, for example, the fear of being evaluated does to the human brain’s information processing,” says the leadership coach Arto Miekkavaara.

The evaluation system originally planned by Nokia is very similar Microsoft’s previously used old system. Miekkavaara knows it well, because his employer, who operates globally, helped Microsoft in the system reform NeuroLeadership Institute.

In the system, some employees are assessed as having significant development needs using a forced distribution, i.e. the Gaussian curve.

“The framework of the system is out of date. Before, it was not known what adverse effects it would have on a person’s individual level information processing or the desire and ability to cooperate with others,” says Miekkavaara.

Nadella shelved the “Nokia” system

Now there is information. A practical example is precisely Microsoft, whose current CEO Satya Nadella reformed the system and used the NeuroLeadership Institute’s teachings and services for the change. Those lessons are now used by two-thirds of the large companies on the Fortune 100 list.

Miekkavaara has been bringing the functions of the NeuroLeadership Institute to Finland. Customers include, among others Kemira, Hedgehog and a well-known Finnish growth company. In the past, customers have also included Nokia.

In the Nadella era, Microsoft, which had failed before, turned into a success, whose market value increased 13 times.

But before that, i.e. CEO Steve Ballmer’s at the time, Microsoft used an evaluation system where employees were placed on a Gaussian curve. Even in the best teams, some employees fell into underperformers. And the success of a colleague meant that your own position in the ranking was in danger of falling.

So this type of system was According to information from Helsingin Sanomat introduced in Nokia.

According to the magazine, Nokia’s European business council sent a message to Nokia’s CEO at the end of November Justin Hotardille a letter in which it criticized the classification of workers very harshly.

Then Hotard told HS Nokian specified the instructions already at an early stage. In the updated materials, supervisors are not ordered to classify employees according to a forced distribution.

According to the original – i.e. already changed – plan, supervisors would have had to define five percent of their subordinates as having “significant development needs”. In the second lowest classification, 20 percent of subordinates are defined as having a “need for development”.

This would be a disastrous system, but why?

Biggest folly: gaussing

Miekkavaara emphasizes that, of course, employees are also evaluated at Microsoft today, and the results affect rewards. However, the evaluation must be done carefully.

“Getting evaluated in itself is a bit of a sensitive issue. But all companies evaluate, and one has to evaluate in some way, but it inevitably causes a distortion in the relationship between the evaluator and the evaluated.”

However, the disadvantages of the assessment increase sharply when you move to forced assessment.

“The big stupidity is gaussing, that is, putting people on the Gaussian curve. That’s the basic problem, that if you’ve hired the best 100 people in the house, how do you get rid of the worst ones or somehow put a stick in it. But there are a million other things in this change at Microsoft than the end of gaussing,” Miekkavaara says.

The danger and disadvantage in this matter is that the mere knowledge of such an evaluation system has a devastating effect on the organization.

“Setting goals and the performance management system is ultimately intended to focus people’s attention on something that would benefit the house. Now if we create a system that makes the attention primarily focused on how we look good in the eyes of the evaluator, then that is a different matter than how we could get something brave done together for our end customers,” says Miekkavaara.

And this is exactly what happens in the forced evaluation system: people’s attention is spent on the evaluation, on pleasing the evaluator, not on the client or the whole. The person being assessed tries to avoid problems and perform the assessment.

“The brain images show quite clearly that a frightened person or any experience with a stronger negative emotional register paralyzes, i.e. shuts down, those parts of the brain that are needed for high-quality thinking.”

However, evaluations are wanted in results-oriented houses, but the relationship between the evaluator and the appraised is always different from others.

“What happens to a person who assumes or knows that he is being evaluated? He starts to make sure. And he really can’t be completely in the same boat with his boss anymore, which is generally quite unfavorable from the point of view of the whole.”

Miekkavaara also refers to studies in which it has been found that well-experienced evaluators – partners of a large consulting company – were even more stressed in the evaluation situation than the evaluators.

So it’s a tricky part of business. That is why the systems should be drawn up precisely.

“I optimize my own slice of cake”

The evaluation is softened in, for example, Microsoft and many other companies, so that the way in which cooperation is carried out is also measured.

“So during Ballmer’s time it was measured how many goals you score and now during Nadella’s time it is also measured how many assists you provide. The third element that is measured is the extent to which you build on the work of others.”

So the goal is to blow into one coal.

“The key is to focus mainly on how we are better able to produce together what we are meant to produce. There is no need to include the evaluation aspect in that discussion in the first place, but let’s look ahead: how we can make things go better and better.”

What’s interesting about Microsoft’s change is that it started with Nadella’s family issues. Wife made the CEO read basic works of psychology, such as Carol Dweckin Mindset, related to the family’s child’s learning difficulties and to support management. This was the basis for a change in the company’s management system, including personnel evaluation. Coincidentally, Nadella was inspired by the same theories that are central to the NeuroLeadership Institute. The key reference framework for the reform is the Growth mindset.

“There is clearly less internal competition in this new Microsoft system than before,” Miekkavaara says.

The goal is to increase cooperation within the organization. And get an eye on the customer and shift attention from internal competition to external.

But forcing people onto a Gaussian curve leads to a very simple result.

“This attitude of the old alliance leads to me optimizing my own slice of the cake, if necessary, at your expense. No one admits it, but practically everyone does it.”