Just a few short years ago, Deloitte released its Global Human Capital Trends report. One chapter’s headline declared:
“Performance management is broken.”
Not long after the report, many large companies began making drastic changes to their performance management systems.
GE, Microsoft, Accenture, and many other Fortune 500 companies axed the annual performance review in search of something else. But what was that something else?
The problem wasn’t the idea of evaluating employee performance. Organizations will always need a way to do that. The problem was with the methods—what was being measured, how it was being measured, and why it mattered.
Performance management as we knew it was broken. But why? What needed to change?
Below is an overview of five forces that have shifted performance management. As you read, think about how these pressures have shaped your organization and where your performance strategy needs to go from here.
The basic premise of traditional performance management is a forced ranking of employees, or grading on a curve. This typically would happen once a year.
But this system was created to suit the workplace at the turn of the 20th century, when the workplace was much different. Performance was measured by output: how many cans you packed, shoes you stitched, or hours you worked.
Businesses today are fast-paced, complex, and face unique challenges. It’s less about production, and more about innovation, critical thinking, communication, creativity, and adaptability. It’s hard to take a rear-view mirror approach to performance today.
The days when employee evaluations relied on a manager’s intuition are long gone. There’s no excuse for highly subjective (and often biased) performance reviews anymore.
We have access to so much data that we can track just about anything. And there’s no shortage of tools to help us collect the data we need—data that allows us to approach performance management with a more objective and informed mindset.
People, processes, and technology come together to get work done in today's workplaces. Managers aren’t only responsible for the performance of individuals. They’re also responsible for their team’s ability to drive results.
This reality requires new strategies aimed at motivating the whole team, while also being mindful of what motivates each team member.
A team-based approach demands fresh performance management strategies. It needs to be fueled by continuous feedback, constant alignment, and thoughtful team building.
The annual performance review doesn’t serve as a very good relationship builder. Building strong relationships takes honest, frequent, and ongoing conversations and feedback.
Personalization and individuality are highly valued in today’s culture. Managers have come to realize that they can’t treat everyone the same way—they need to take an individual approach with employees. Good managers know that the more they understand each employee’s strengths and weaknesses, the more likely they are to maximize their potential.
Employees deserve to know where they stand—and the opportunity to do something about it. Setting aside opportunities to exchange feedback throughout the year creates a much more engaging experience for employees and managers.
These five forces help explain why performance management has shifted. But what should you do about it? How do you help your organization transition from its old and ineffective ways to a next-generation performance management system?
Download our ebook, Moving Beyond Performance Management is Broken, to find out!