Should you overhaul your performance management system?

Although it has obvious benefits for aligning, motivating and developing an organization’s workforce, performance management is the most hated of human resource processes. Performance management is often bureaucratic and time consuming, with long forms to complete, 360-degree feedback, rankings, forced distributions, and conflicting and overlapping competencies to rate.  What often gets lost in the process is relationship building, feedback and employee commitment to higher levels of performance.

Quality guru, W. Edwards Deming, called for ending performance appraisals altogether because he found the whole process demotivating, and he had a strong belief that effective systems could curtail variations in process outcomes. Simply controlling process variation within a company, however, does not build talent, improve customer relationships, nor develop employees.

UCLA professor Dr. Samuel A. Culbert also advocates eliminating performance appraisals, saying that they are, “A negative to corporate performance, an obstacle to straight-talk relationships, and a prime cause of low morale at work. Even the mere knowledge that such an event will take place damages daily communications and teamwork.”[i]  Instead, he advocates performance previews: problem solving discussions about how the boss and employee will work together more efficiently and effectively than in the past.

A recent study by Deloitte showed that 39% of the companies they surveyed are changing their performance management systems to place more emphasis on continuous feedback and coaching. Organizations are also separating feedback from pay discussions.  Companies who have made such changes include: Adobe, New York Life, Motorola Solutions and Kelly Services.[ii]

Should companies stop doing performance appraisals?

No, it’s important to record employee accomplishments, develop an inventory of their competencies, and provide developmental feedback and goals, but performance management needs an overhaul. Here’s where to begin:

  1. Align performance feedback with the purpose, principles and strategic objectives of your company. What may be ideal for Deloitte in the consulting business will not work for Cisco, nor for AbbVie in the highly regulated pharmaceutical industry. The leadership competencies required of fast-growing benefits/HR dashboard Zenefits will be very different from an established enterprise like Honeywell Aerospace.
  2. Pay attention to the feedback provided by management and employees in surveys and focus groups. Feedback is a gift! Often top management believes the world is rosier than the day-to-day reality of middle managers and workers. Listen to the feedback you receive! Do your teams and employees understand the company’s business strategies and their personal roles in implementing those strategies? Do they believe that their leaders act faithfully to the company’s principles? Do they believe they will be rewarded for excellent individual and team performance?
  3. Review current performance management research. The research on goal setting, rewards and incentives is very clear. Unfortunately most companies simply aren’t following it. To learn more about performance management research, download my whitepaper “Performance Management: Are you aligning employee passion to company purpose? Time for an overhaul.”
  4. Use workforce analytics to understand the motivators and competencies of your best workers, by occupation. Apply this knowledge to how you recruit, select, lead, motivate and develop your employees so that you can hire more just like them! As a human resources leader, I have used workforce analytics to help functional leaders identify the most predictive indicators for selecting, developing, motivating and promoting excellent workers. I have seen workforce analytics, when aligned with organizational strategies and combined with employee feedback, lead to significantly improved business performance in sales, marketing, clinical research, engineering, program management, manufacturing supply chain and management practices.

Performance management is most effective when it aligns employees with company strategies, builds commitment, provides clarity, feedback and development, celebrates achievements, and identifies high potential employees. It works best when you have agile, self-aware leaders who have learned to lead teams from different cultural backgrounds, set high goals and standards, and meet frequently with employees to reduce obstacles and enable their success.

What is your company doing to overhaul performance management?

Victor Assad is a strategic human resources consultant and coach who works with key decision makers and human resources leaders on talent management, accelerating change, leadership development, and other strategic initiatives such as mergers and acquisitions, strategy implementation, and flexible workplace. Please e-mail Victor at victorassad6@gmail.com or visit Victor’s website at www.victorhrconsultant.com for free articles and white papers.

[i] Dr. Samuel A Culbert. (Oct. 20, 2008).  “Get Rid of the Performance Review! It destroys morale, kills teamwork and hurts the bottom line.  And that’s just for starters.” The Wall Street Journal.  Retrieved from online.wsj.com/news/article_email/SB122426318874844933-IMyQjAxMT10MjA0NDIwNjQzWj

[ii] Lisa Barry, Stacia Garr and Andy Liakopoulos. (March 4, 2014). “Performance Management is broken. Replace “rank and yank” with coaching and development.” Deloitte University Press. Retrieved from dupress.com/articles/hc-trends-2014-perforamnce-management/

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