Organizational Effectiveness

Is Your Performance Management System Truly Driving Performance?


Performance management is a standard process that is usually present in some form in every organized business. It is a process created with the aim of managing individual performance, which together helps to manage organizational productivity and holds employees accountable for the quality of output they produce.

As most of us will have experienced, organizations typically use forms, templates, online platforms and systems, as well as tools like multi-rater assessments, methods like force ranking, quantitative scoring etc to evaluate employees.

However, a new trend has been observed over the last couple of years- organizations are beginning to realize the obsolescence of such programs and the lack of their effect in enhancing their employee’s performance. According to the Corporate Executive Board (CEB), a management research group, 95 percent of managers are dissatisfied with their Performance Management systems, and 90 percent of HR heads believe they do not yield accurate information.

Performance management systems in a lot of organizations are often time consuming, complicated and do not tangibly enhance future performance. HR departments usually spend several weeks and months each year to administer the process, and yet, there are no clear links to increased productivity as a result.

Employee expectations have changed. It’s not just Gen Y – employees everywhere and of every generation expect more. More involvement, more accountability, and more transparency. When it comes to managing their performance, employees have shifted from being passive recipients to active agents. Not satisfied with a one-way download of performance feedback, employees want to participate in the performance data collection process. And they liken the ‘annual event’ of a performance review to arriving at the pearly gates on Judgment Day. Managers have changed too. Command and control is no longer cutting it – managers are expected to guide and coach, provide balanced constructive feedback and inspire, rather than enforce, performance.

Grading employees on the bell curve does not particularly solve the purpose of performance enhancement. Many HR executives state that the traditional method propels high performers and fails to motivate the average performers thus failing to bring about any business value. In a dynamic environment where talent retention and employee competence is of key importance, to survive and have a competitive advantage organizations should consider reevaluating their performance management system.

Adopting a performance acceleration approach

The most recent organization to adopt a changed approach to their performance management system is Deloitte, an audit and consulting company. They conducted a survey amongst their employees to gauge their satisfaction levels with their incumbent system only to realize that more than half of their employees said that current performance management approach forced neither employee engagement nor high performance. They were seeking a more real time and personal approach to enhancing their performance and something that looked at the future rather than the past.

Another case is that of Adobe. Adobe discontinued performance scores in 2012.

In their place, Adobe instituted “check-ins”—ongoing discussions between managers and employees to set expectations, offer feedback on performance, and recognize strong work. Nearly three years into the process, Adobe’s HR leaders believe that people find it much easier to start a conversation regarding performance. Further, engagement surveys show that employees have higher expectations of performance conversations and receive better feedback than ever before. Turnover levels remain very low, with voluntary attrition continuing to decline, despite the exceptionally competitive talent market in which Adobe operates.

Organizations are moving away from annual performance appraisals and are recognizing the effectiveness of implementing a more coaching- conversation approach to performance acceleration and feedback. In one of our previous articles, we spoke about adopting the coaching technique to manage a team. Instead of deploying a rigid rating system, organizations can train managers to coach their employees while implementing assessment and 360 tools to get feedback for their teams as well. Organizations can also deploy tools that can help employees determine their goals and the managers can utilize these tools to develop a performance plan for their teams. Managers can evaluate the progress of each individual’s development as well as determine the ROI of the development process that has been put in place. Such tools bridge the gap between training and sustainable, on-the-job behavior change. It provides the follow-up and encouragement needed to deliver lasting results from all development initiatives.

HR executives across organizations need to look closely at their performance evaluation and feedback system and should evaluate their effect on driving as well as enhancing performance. A strategic shift from evaluation of historical performance to coaching and developing strong future performance is helping to create increasingly engaged employees and a more productive workforce.

Felix Global provides custom 360 assessment tools and feedback facilitations to support performance management and team development programs. We also design custom coaching programs with 360 assessment components to help managers successfully uncover blind spots. To find out more, please contact us today

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