A true disruption of performance management is not easy – but the demonstrated rewards are plentiful, writes Kathi Enderes
Mention performance management in any work setting, and you might get a shrug at best, or – more likely – a collective roar. It’s the work activity everybody loves to hate.
The 2018 High-Impact Performance Management study from Bersin, Deloitte Consulting LLP surveyed more than 1,000 organisations globally and revealed just how much people dislike the performance management process: it received an abysmal Net Promoter Score of -60, making all other people processes look more appealing. This dissatisfaction is truly universal, with no variation across industries, geographies, or sizes of organisations.
Ratings and reviews are not dead, and simply eliminating them is not the answer
To deal with this negative perception, organisations have tried different rating models, feedback tools, manager coaching, recognition programs, continuous performance management, and more. But in 2019, the debate about what works best still rages on. Many organisations have attempted to throw it all out, eliminating ratings and reviews entirely. However, Bersin research identified that 86 per cent of organisations surveyed use performance ratings, and 96 per cent use formal reviews.
Even more, our research shows that ratingless and reviewless approaches are similarly despised. High-performing organisations (those that have the best business and workforce outcomes, and the most successful performance management approaches) are 1.6 times less likely to eliminate ratings and four times less likely to abolish reviews.
Despite the hype …
Reinventing with a human focus: four factors of success
To fundamentally change performance management, organisations need to stop tinkering around the edges by only looking at rating models or review systems. Instead, business leaders should start to create a human-centered performance management strategy, focusing on four success factors identified in our research.
1. Meaning: Start with the “why” of performance management. At its core, there are three reasons for performance management: to compare and contrast, to focus on compensation and promotion, or to collaborate and grow so people can do their best work. A decade ago, when the economy was at a low point, the focus was squarely on weeding out low performers. Today, in a talent-constrained environment, supporting people to do their best work has become a necessity – and people demand it from their organisations. We identified that high-performing organisations are 2.3 times more likely to see growth and development – not compensation and promotion – as the purpose of performance management.
2. Experience: Unleash individuals and teams to do their best work. As work is increasingly project- and team-based, the responsibility for feedback and growth is shifting from a top-down to a bottom-up approach. High-performing organisations empower individuals with effective, real-time peer feedback about their performance and contributions – helping them understand strengths and opportunities for improvement. They follow through with peer-driven development activities – learning with and from each other through work experiences, for example, with learning networks and knowledge-sharing systems.
3. Leadership: Human-centered leaders create the conditions for team success. Leaders are still important – but not as the sole source of feedback or evaluation. Instead, leaders play a critical role in enabling performance in the flow of work – creating a culture of feedback, development, and progress. High-performing organisations empower their leaders to serve their teams as coaches, communicators, and supporters, and hold them accountable for their team’s employee engagement and workplace experience.
4. Technology: Use technology to embed performance and development in the flow of work. Once an organisation has shifted its thinking around its approach to performance management, a similar shift needs to occur in its approach to technology. High-performing organisations strategically use technology to enable the convergence of performance management and work. This bottom-up approach allows performance activities to occur in real-time, driven by individuals and teams as they work. This means using technology that serves up performance and development indicators in real-time to the people who do the work, and using technology that integrates seamlessly with work systems like email, calendar, project management, or sales support tools.
The case for change
A true disruption of performance management is not easy – but the demonstrated rewards are plentiful. Organisations with the most mature performance management approaches are 4.5 times more likely to develop leaders effectively, four times more likely to take appropriate risks, 4.9 times more likely to manage change effectively, and have an astounding 92 times higher increase of earnings per share over a three-year period.