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Is It Time to Stop Feeding the Performance Management Dinosaur?

Deloitte Debates


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Traditional performance management—that familiar annual or semiannual review and rating process— is one of those organizational routines that many people love to hate. Has the time come to lay it to rest? Or does it still merit an ongoing commitment?

Despite the way work and workplaces have changed over the years, becoming flatter, more matrixed, more technology dependent and less geographically bound, many performance management processes in use today remain strikingly similar to those in use decades ago. A manager rates an employee against a list of attributes and often competitively against others and those ratings are used to help determine promotion, salary and development opportunities. Viewed aggregately, the performance review data gives leaders a snapshot of how their workforce is performing.

Yet there are many who argue that the process fails on a number of fronts: It’s too narrow, focusing only on the supervisor-employee relationship, it happens too infrequently, it doesn’t reflect today’s team-oriented, project-driven culture and more. A 2010 World at Work study found that 58 percent of HR leaders grade their performance management process a “C” or lower —and it’s doubtful employees would rate it much higher.

So if most people don’t love it, is it time to leave it?

Explore all sides below by clicking on each button:

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  • My take
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It’s not going away; it will never go away.
Any business needs to manage its human resources—just as it must manage its non-human resources. You need to assess quality and effectiveness of people just as you would other areas of your organization.
But it’s holding us back.
By focusing on the traditional top-down kind of performance management, we’re losing opportunities to coach and motivate people for today’s rapidly changing business challenges.
Get over it already.
People have been complaining about performance reviews as long as there have been performance reviews. It’s human nature to not want to deliver or receive tough messages. Doing away with performance management is a fad that’s overly focused on perceived generational differences that shouldn’t matter once people get into the workplace.
We’re over the process, not the need.
Clearly, giving people performance feedback is essential. The question is whether this formal process of assigning grades is helpful or not. Given the dynamic work we do, we’d rather see more just-in-time feedback as work is happening.
It gives a measure of protection—even comfort.
Our formal process gives us documentation to support HR decisions and proof that a message has been communicated; we need that from a risk and compliance perspective. And, sad but true, we’ve found that many employees want to hang onto a midyear and annual review because it’s the only time they get that kind of attention.
There are better solutions.
Certainly we can’t let the need for documentation to manage risk from the few keep us from moving toward more effective ways of motivating performance of the many. We’d rather find a way to give employees more regular feedback about their work and development and balance documentation where it makes sense.
It helps us focus.
While leaders might complain about how time- consuming it is to evaluate people, they also cling to the process. It gives them metrics about the employee population they believe are useful and that can be hard to come by otherwise. And it forces them to put aside other matters and focus on people.
We’d rather shift the focus.
We think leaders would appreciate more just-in-time and accessible metrics on employee performance that come from a variety of sources besides the immediate supervisor (such as peers, customers, social media comments, operational data and the like). The technology to manage that is becoming much more practical.

My take

Daniel Roddy

Daniel Roddy, Specialist Leader, HR Transformation,
Deloitte Consulting LLP

The bottom line for virtually any organizational process is whether or not it works for the organization and gives you the outcome you need. Top-down, process-focused performance management for a business with very definable work objectives and tightly defined roles may be just fine. For a business impacted, or even driven, by different characteristics—globalization, virtualization, knowledge-based work, or highly variable work based on rapidly changing business challenges—traditional approaches to performance management start to become less of a fit. Organizations that face those types of pressures are increasingly looking for choices and experimenting with other forms of performance management beyond the periodic reviews and ratings that so many of us “grew up with.”

As is true with many of the organizational shifts and trends we see today, technology innovations and the emergence of social media and collaboration are playing a pivotal role in redefining performance management. While some organizations are using technology tools to enable and streamline their traditional process, others are using them to forge new ground. Their aim is to broaden the input that goes into measuring an individual’s performance and increase the frequency of feedback.

One of the keys to success with this less hierarchical, more inclusive approach is that everyone in the organization, employees as well as leaders, needs training to develop related skills. Leaders should be able to interpret and calibrate far-reaching feedback that they never had before. And rather than relying on leading and motivating by rank, they need to build different skills to be able to coach and mentor others effectively. In turn, these new skill sets—the ability to recognize and capitalize on strengths and help others develop, the ability to get results through others— can become important core skills for everyone in the organization.

Figuring out what’s right for your organization may mean testing new approaches on smaller groups—say a dynamic part of your business that already engages in team-based, participative management to accomplish goals. It may mean piloting a more innovative technique and then extending and leveraging success.

But if a lot of people think the current process is a waste of time, it probably is. Why not spend the time and effort to improve it, rather than continuing to feed the dinosaur. 

Related content

Library: Deloitte Debates
Services: Consulting
Overview: Human Capital, Talent
DGES: Organizational Performance


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