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Reinventing Performance Management

If you are still doing the more traditional, annual review, you may want to rethink your approach.

The Problem with Traditional Performance Management

Despite years of research and practice, dissatisfaction with performance management is at an all-time high. More than 75% of managers and employees feel that traditional performance management results are ineffective and/or inaccurate. Study after study has shown that the performance review is dreaded and can be highly demotivating to employees, even the highest performers. Recent research has shown that performance ratings have zero correlation with business unit performance.

Why a Change is Needed

Long cycles and complexity are reducing agility. Getting feedback once or twice a year is too infrequent to impact behavior and performance. The formalized process places additional burden and time demands on employees and leaders without improvement in performance. Some additional issues with traditional performance reviews are:

  • Inhibits collaboration, which reduces customer focus.

  • Not connected to how the work gets done - fast and in teams.

  • Too complex and time-consuming for the return it provides.

  • Ratings have been shown to be more of a reflection on the “rater” than actual performance.

The Trend

Many organizations such as Microsoft, Medtronic, GAP, FedEx, Adobe, Expedia, Cargill, and Deloitte are more have disbanded rankings and annual performance reviews.

Trends include:

  • A much simpler, qualitative and frequent process

  • More forward-thinking approach– instead of dwelling on past mistakes focus on what to change in the future

  • Coaching and development-oriented performance discussions

Modern Approach to Performance Feedback – Performance Conversations

The new, recommended approach involves collaborative performance conversations. I believe that quarterly is a good cadence to have these conversations. However, some organizations do monthly, and others do twice a year.

According to Gallup, Google Project Oxygen and other sources, shifting managers to coaches is one of the best ways to improve engagement and retention. The Performance Conversation is a great way to start by developing some questions relevant to your organization on topics such as accomplishments, challenges, career development, etc. Employees complete the questions and send to their managers. The manager then adds their comments and schedules the conversation.

Of course, this is only a part of the recommended approach. It is suggested that you include:

  • Purpose - Help employees make the connection between their jobs and the overall company purpose.

  • Goals - Work with employees to set SMART (specific, measurable, achievable, realistic and time-bound) goals as part of the process. The number may vary depending on the frequency - but perhaps two performance and one career development goal might be used for quarterly approach.

  • Metrics - This involves a discussion of any metrics that are part of the team's performance and/or their specific jobs.

  • Development - Include some discussion about development and at least one career development goal but recommend that you schedule a separate meeting just to have a career conversation.

  • Team and values - Discuss how they are contributing to the team and displaying the organization's values.

Would you like a sample template or some assistance in thinking through this approach? Contact us

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