Why You Should Iterate on Your Existing Performance Management Strategy


November 24, 2020

Amy is an HR manager at a firm that isn’t tanking but isn’t exactly succeeding with flying colors either.

The company’s performance management system was outdated when Amy became head of HR four years ago. Since then, Amy has updated the system twice and swapped it out entirely three times. And for the time, money and energy it takes to get a new system up and running, it hardly seems worth it.

Amy’s problem might not sound unfamiliar. In fact, a large survey of organizations from Deloitte found that 89% of respondents either recently changed their performance management system or planned to in 18 months. Only 10% of the firms surveyed thought that their performance management system was "excellent" and succeeded in driving employee engagement and high performance.

Clearly, a change is in order. But is testing yet another performance trend really the answer?

A lack of alignment is plaguing performance review systems

The problem that most execs and HR pros keep making is that they're too focused on finding an easy ticket to better performance management by way of the hottest new trend or tool in the market. But the real magic comes from the decidedly unsexy task of constantly aligning (and realigning!) your performance management strategy with your organizational strategy.

Shiny object syndrome is killing your performance strategy

It's not hard to see why people like Amy get stuck. There are so many ways to design a performance management system and so many different HR platforms to choose from. It can be tempting to grab up the latest game-changing idea from other best-in-class companies in the hope that almost overnight, THIS will become your awesome new MO.

Harvard Professor Michael Beer explains that this only deepens a company’s troubles. He argues that many companies don’t try to align strategy with change and so they “develop many disconnected initiatives to bring about change — initiatives that by their piecemeal nature are doomed to failure.”

Here's what usually happens

So let's say Amy sees that Netflix focuses mostly on regular 360 reviews, so she tries that for one year. The problem is, she’s doing it through two new HR platforms while also adopting Google’s upward feedback model to try and improve managerial performance.

It's a lot. Her HR department and managers feel overworked by the extra load of learning new review processes and platforms. Her execs aren't used to a bottom-up review structure and have become so accustomed to a revolving door of HR experiments, they don’t put their full weight behind it. In the meantime, her employees are totally confused about what performance metrics matter most and are quickly becoming disillusioned with the entire process.

Amy and her teams haven’t taken the time to align their performance management strategy with their business strategy. The result is a Frankenstein’s monster of mismatched HR policy pieces and platforms.

How to straighten out your performance strategy

It’s easy to talk about strategic alignment but actually fixing a misaligned performance management system takes some serious elbow grease. Luckily, plenty a business leader has been there. Here are some solid experts and examples that can help.

Measure and realign

Over at investment firm Betterment, CEO Jon Stein aligned his performance management system and business strategy through a series of measured adjustments (and continuous calm).

At first, he started with an OKR-based approach like what he saw Google do. When that put his teams on objectives they didn’t agree with, he refocused to a system that gave his teams more agency to make narrower goals. When that system made his teams too inwardly focused and myopic, he adjusted again and made flexibility a goal.

Rather than throwing out an entire system, he tweaked each strategy and approach within his current system, letting his strategy (and people!) adapt to changes in the business over time. He followed up with his teams after giving each new strategy a little time to sink in to see what went wrong, what went right, and what could be done to make their performance management system even better.

Keep what works, remove what doesn't

At Deloitte, research is a big part of the business, so naturally it factors into their performance management system. The top-four firm rebuilt their performance management strategy using the smart data crunching they're famous for and redesigned their employee review process to be faster, more open-ended and less prone to bias by removing many of the major bottlenecks (and ahem, paperwork) in the system.

Putting in the work

For businesses like Betterment and Deloitte who have succeeded in removing the headaches from their performance review systems, keeping everyone abreast of the changes and the vision behind those changes was important.

An ability to stay steady, resist shiny object syndrome and focus on doing more of what works and less of what doesn't was crucial to developing and maintaining a winning performance strategy.

There is no shortcut to great employee performance. But what if, instead of immediately jumping from one performance trend to the next, we take a little extra time to think about what is right for our business and our people?

You might find that your days of constantly revamping your systems are finally over.

What to do next.

Here are three ways you can continue your journey to a more modern and effective performance management strategy:

  1. See PerformYard In Action. Find time with one of our product experts to get a live look at what it's like to use modern performance management software. Every call starts with a 5 minute discussion of your approach and then immediately dives into a live product demonstration that's based on your organization's process. Or start by watching a 2-minute video overview.
  2. Learn more about modern performance management. Start with our Guide to Building a Modern Performance Management System, or visit our blog to see the latest ideas from our team.
  3. If you know other HR Pros who would appreciate this article, share it with them through email, LinkedIn or Twitter.