There is a revolution happening in Performance Management. It is easy to see at corporate leaders like Adobe, IBM, Microsoft, Deloitte, Accenture, GAP, and General Electric, but the revolution is happening everywhere.
The revolution is being driven by employees. The traditional end-of-year performance review has not fit with modern company and employee goals for many years now and employees are demanding a change. This has forced many HR departments to design new modern performance management strategies.
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A Deloitte manager described their old review process as “an investment of 1.8 million hours across the firm that didn’t fit our business needs anymore.”
Accountability vs Growth
Performance management can go one of two ways. You are either putting structure in place to force accountability (Jack Welch asking the bottom 10% to leave) or you are creating an environment that helps employees grow. If you have a once-a-year process that emphasizes financial rewards and punishments, whether you want to or not you are focusing on holding people accountable for past behavior rather than improving current and future performance.
Accountability and growth are both important, but as the labor market heats up the need to go beyond just accountability is more important than ever.
An employee has little to no motivation to participate in a system that is just about accountability, and managers don't like it either. Beyond that, it is an impossible task. How is anyone supposed to summarize a years worth of work into a single conversation.
Employees want a focus on growth. This often takes the form of regular checkins where the conversations can be about fixing issues going forward rather than revisiting issues from the past. Managers also prefer a growth focus, research has shown that managers are far more likely to give regular feedback than year-end feedback because it feels more natural and can be framed as a growth opportunity rather than a reckoning.
However, despite overwhelming support for moving away from traditional accountability focused performance appraisals, there are many issues that remain. In fact many of the industry leaders we mentioned in the first paragraph have returned to numerical ratings and some sort of year end review, but more on that in a moment.
The four biggest challenges of moving away from a structured system are...
- Aligning individual and company goals
- Rewarding performance
- Identifying poor performers
- Avoiding legal trouble
The Third Way
The most progressive companies which all started removing qualitative year-end performance reviews a few years ago have begun to bring them back for the reasons stated above, but that doesn't mean they've returned to their old ways.
Companies have adopted a third way. Now companies like General Electric are having their managers meet regularly with employees as part of the natural flow of the business. This means at the end of projects, when roles change, or when issues arise. These natural checkins are recorded in simple technology solutions like GE's PD@GE which allows managers to quickly jot down notes after meetings without all the traditional paperwork overhead associated with HR meetings.
Then at the end of the year the manager can compile a years worth of real-time feedback with the press of a button, add a quick summary and give the employee a more accurate rating of their performance. This end of year meeting also become less of a reckoning and more of a simple qualitative summary of past discussions.
While accountability and development are the most common goals of performance management systems, there are more. Read: The Purpose of Performance Management (5 Options)
How Are We Supposed To Manage This?
Interestingly, one of the challengers to this new way in performance management has been HR departments. Despite understanding the benefits the process has not been achievable with their outdated systems for managing reviews.
The answer is technology. The industry leaders we've been discussing have all turned to software to manage the continuous feedback and end-of-year feedback processes. This has left HR to spend less time cajoling managers and forcing through review sign-offs on time and more time on creating a review process that is effective at driving growth and accountability in the company's employees. Companies like GAP have seen an increase in the coaching they can provide to managers on the best way to mentor and lead their teams to improvement since implementing their performance management software.
PerformYard is Performance Management Software
PerformYard was designed for whichever review process your prefer, whether it focuses on accountability or growth, or whether it is year-end, continuous, or both. PerformYard removes the time-consuming paper logistics work that bogs down so many HR departments, so that if it is time to reform your review process you will finally have the time and technology to make it happen.
If you are interested in scheduling a demo with one of our team members to discuss your performance management process and how PerformYard can help, just click the button below.