Future Of Performance Management System

Performance Management System has undergone a lot of changes in the recent past to effectively translate effort to performance. The old ways of assessing performance have proven to be costly and ineffective. Bell curve alias relative comparison has been observed to be time consuming and often detrimental to performance. Organizations such as Adobe, Accenture, Microsoft and Delloite have adopted new ways of assessing to enhance individual and organizational performance.

Recent Changes

Key modifications in the performance management system include:

  • Rating team members on managers’ own future actions with respect to the team members is also practiced by few organizations. This solves the problem of idiosyncratic rater affect with managers rating employees on their own feelings / intentions rather than rating employees’ skills inconsistently.
  • Goal setting no longer being an annual exercise but goals being reviewed quarterly/periodically.
  • More frequent meetings between managers and employees for setting expectations clearly, sharing feedback and coaching on developmental goals. At least end of the project or quarterly feedback is recommended though the meetings could be more frequent than this.
  • Rating employees on absolute performance rather than using bell curve.

Results so far 

Though the results are awaited largely, few organizations have already started reporting the benefits they are experiencing. Adobe has reported a drop in voluntary attrition rate by 30% and an increase in involuntary attrition rate by 50%. Inorder to facilitate more frequent feedback and development conversations, Adobe has introduced a system namely “Check-in”, as per which managers should have atleast quarterly discussions with their team members. More frequent communication has honed the leadership and communication skills of managers. Infact, 78% of employees perceived their managers to be open to feedback from them.

Adobe has also witnessed promotion of a culture of ownership where employees want to participate in the success story of the organization. GE has discovered that the new performance management system has promoted trust between managers and employees – a key characteristic of high performing teams. The new system involves a mobile app called as PD@GE to define near term goals. Summaries of frequent conversations, named “touchpoints” can be captured in the app. GE has also witnessed better results by the use of the new system in the pilot project they have run.

Encouraged by organizations such as Adobe and GE, Deloitte has also revamped its performance management system to clearly see, recognize and fuel performance. One of the most important actions taken by Deloitte is to request its managers to evaluate their future intentions with team members rather than rating them on their skills. The new feedback structure includes questions such as “Given what I know of this person’s performance, I would always want him or her on my team”. This enables managers to take judgment solely on their available knowledge of the team member. While results are still awaited, Deloitte is working towards creating not just a simple but also a rich view of employees’ performance to increase the transparency of the system.

As per a survey conducted by CEB, 43% of organizations are either planning to introduce or open to consideration of new performance management system (n = 296) across the globe while the vast majority of 51% organizations have no plans to do so. Organizations which are planning to introduce are awaiting results from their pilot study while other organizations are awaiting results from organizations which have already implemented the changes.

Way Forward

With greater focus on continuous feedback & development and absolute performance, we are moving towards a more progressive way of assessing performance. In this changing scenario few practices have become more important and need to be relooked / redesigned for successful implementation of the new approach. These include:

  • Honing feedback giving skills of managers – This has become more important than ever since this is the cornerstone of a culture of continuous feedback.  The feedback needs to be constructive and future oriented or else employees will feel burdened with overdose of feedback. Organizations not only need to provide periodic behavioral training to their managers but also assess them on how they are faring on this skill. Organizations need to provide individual guidance to managers in case they are struggling to be positive in their approach. Leaders need to take initiative and set right examples for others to follow.

  • Facilitating real time feedback – The more data points there are on the performance of employees the lesser the subjectivity in assessing the performance. Organizations should use mobile friendly tools which facilitate providing continuous multi-rater real time feedback to employees. 360 degree feedback helps employees understand how they are perceived in the organization. Organizations should empower employees to initiate feedback. This will build a culture of ownership amongst employees.

  • The tool should not just provide data but also insights on development areas and track progress on them. Use of Big Data could narrow the gap between an organization’s top and bottom performers by analyzing their daily activities, finding patterns and highlighting the difference in their approach. This will help managers to have more effective development conversation with employees. This will also enable HR to track the quality and frequency of conversations between manager and employees.

  • Continuous recognition – Continuous feedback also calls for continuous recognition. It has been researched that employees are best motivated when they receive immediate rewards / recognition for their achievements. Coupling continuous feedback with year-end rewards / recognition is not a very effective way of motivating employees. Thus organizations need to redesign their recognition program to support the new performance management system. 

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