The World of Performance Management is Changing Rapidly

By: Mark F. Kluger

 

Many employers are drastically overhauling their traditional performance management programs. The trend is away from annual reviews and formulaic evaluations with numeric ratings. By the end of 2015, more than six percent (6%) of the Fortune 500 companies had eliminated rankings altogether. These same employers are also changing the timing of when the reviews will be conducted.

             Instead of the traditional performance management systems, these employers are opting for more narrative based reviews that evaluate employees on specific projects at the conclusion of the assignments on which the employee is being judged. The idea is that more timely feedback will be more meaningful and, as a result, will have a more genuine impact on performance. This approach aims to avoid the repeated correctable errors that occur when employers wait to review performance until some arbitrary date that might be as long as twelve (12) months after the actual work is completed.

             In September 2015, Accenture scrapped annual reviews and rankings for its 330,000 employees. The consulting giant opted for what it describes as a more fluid process in which managers provide feedback on an ongoing basis at the conclusion of projects. According to Accenture, the reason for the change is that its managers spent extraordinary amounts of time preparing annual reviews and the company invested substantial sums of money on the traditional performance management system none of which resulted in meaningful improvement in employee performance.

             Similarly, in March 2015, Deloitte announced that it was piloting a new program in which performance reviews will unfold incrementally throughout the year. Deloitte’s new review form includes only four simple questions, two of which can be answered “yes” or “no.” Not surprisingly, Microsoft led the way, eliminating its twentieth century performance management system two years ago. Although the trend may be driven by the need to keep Millennials engaged in the workplace, it is long overdue.

             Among the many problems with traditional performance review processes is that they often do not encourage managers to provide direct, specific evaluations and instead allow evaluators to rely on adjectives to describe generalized employee behavior rather than using details from real incidents. Telling an employee, for example, that he is “unreliable,” does not provide him with any meaningful feedback and only serves to demoralize and frustrate. On the other hand, showing that same employee a calendar with a circle around each day that he came to work late during the preceding two months provides concrete feedback that may lead to the conclusion that the employee is unreliable, but at least will help him understand why his boss feels that way. It will also open the door for a dialogue in which the employer and employee may be able to come to a mutual understanding of expectations. Such direct, timely, objective feedback leads to the setting of goals that can be measured on an ongoing basis, resulting in a far more fluid evaluative process throughout the year.

             As Accenture emphasized in announcing its new performance management program in September, employers must stop trying to measure the value of employee’s contributions after the fact.  Instead, employers should provide support through more consistent and regular feedback in real time, so that the information can be absorbed in context and more likely lead to improved performance.

             Ultimately though, the success of any performance management system is dependent not only on the tools used to implement it, but on the contributions and commitment of the managers who carry it out. If employers genuinely want to use performance management to enhance their organization, they must train managers in how to implement the program and, of course, to then hold managers accountable for making sure the program is regularly and properly implemented.