Reinventing Performance Management: Focusing on the Future

As featured in the Fall 2016 issue of HRmatters

Catherine Schinkel, Senior Manager, Human Capital Consulting joined Deloitte’s consulting team this summer.  For more information on reinventing performance management, plan to see Catherine and Lizanne Roziere, Director of Human Capital Consulting, at the HRMAM conference this fall. You can also contact Catherine at cschinkel@deloitte.ca or Lizanne at lroziere@deloitte.ca. 

There is an old adage about performance management: “It’s the one event where the manager gets no sleep the night before, and the employee gets no sleep the night after.”

When I’ve shared this with my participants during annual performance management training, the response is always the same: uncomfortable laughter and nods. The managers tell me this is because they find it difficult to be in a position where they have to judge others, or to work within a system in which they must follow a forced distribution that requires them to rate more than half of their people as “average.”  From the employees, I hear stories about performance reviews riddled with surprises and lack of clarity about exactly what it is they are being evaluated on.

Add to this recent evidence that tells us that current programs are simply not effective, and it is no wonder that leaders, employees and HR professionals alike question the conventional wisdom of performance management. In fact, more than two thirds of the companies polled in our annual Global Human Capital Trends Survey indicated that they are redesigning their performance management process this year (Deloitte Consulting: Global Human Capital Trends Report 2016).  It is becoming evident that the feedback received through the annual review is not timely enough in the agile workplace, and we know that Millennials – who make up close to half of the workforce – want more frequent input and performance based, metrics-focused feedback (Hamerman  & Schooley, 2014).  It is no wonder then that traditional performance management is ready for a little disruption.

Enter Deloitte.  Upon joining the professional services firm this summer, one of the things I was most excited to learn about is the organization’s efforts to pilot a completely overhauled program under the banner “Reinventing Performance Management.”  This new approach will see the organization doing away with traditional elements such as cascading objectives, once-a-year reviews, and 360-degree-feedback tools.  Instead, they are adopting a nimble approach to provide ongoing coaching and constant learning, with a decreased emphasis on ratings.  The changes are the result of an evidence-based study that drew on 3 things, as outlined in an article published in the Harvard Business Review last April: a simple counting of hours (the company was spending 2 million hours annually on traditional performance management), a review of the science of ratings (which concludes that ratings tell us more about the unique tendencies about the rater than they do about performance), and a carefully controlled study of the organization.  The outcome is a program that is very suited to this agile organization that relies heavily on talent for its success.  But Deloitte maintains that the principles behind this program can be adapted to most organizations, within the public or private sector.  And given that they provide HR advice to some of the world’s biggest companies, it is very likely that these principles will start to pop up in more workplaces.  Here’s what you can expect to see:

• Check-ins: Deloitte endorses regular conversations between the employee and team leader about priorities, performance, and strengths.  These discussions are designed to allow for immediate course correction, as opposed to a year-end review that may cover off too little too late.  The nature of the conversation will vary, but the topics covered may include identifying roadblocks, general or specific updates on work progress, and even general well-being.
•  Performance snapshots: leaders will be required to provide regular assessments of an employee’s performance, at the current point in time (for example, at the end of a project) and based on their own observations, check-ins, and feedback from others.  At Deloitte, the snapshot is derived by asking the leaders to respond to 4 future-focused statements, such as “Based on what I know of this person and if it were my money, I would award this person the highest possible compensation and bonus.”  Data can be collected and compiled from multiple raters over time, providing an insightful snapshot of performance.
•  Pulse surveys: these short surveys are completed by employees several times during the year.  Research shows that individual performance is impacted when people are able to use their strengths, have clear expectations, and a strong sense of mission.  Therefore, the pulse survey asks employees to respond to simple but key agree / disagree statements – such as “I have the chance to use my strengths every day at work”, and “I am really enthusiastic about the mission of the firm” – providing the leader with important insight based on data that can be used to influence employee engagement and impact performance in real time.
•  Talent reviews: these future-focused discussions emphasize development and retention, and involve a careful examination of a group of employees in an area of the business – typically those with hot skills, those who are eligible for promotion, and/or those who are aligned to a key strategy. The reviews are attended by a mix of decision makers, and the outcome is a specific action plan for the targeted employee.

It is exciting to observe this shift away from an annual, rear-view facing performance discussion and towards something that is more aligned with our culture of instant updates and focus on the future.  Instead of asking our leaders to evaluate employees based on accomplishments from the relatively distant past, imagine giving leaders the tools that will help them understand performance in order to develop people for the future.  Instead of spending hours selecting and discussing the “correct” rating – only to tell more than half of our people that they are average – consider what it would mean to reinvest this time on activities that contribute to higher performing teams and individuals.

While performance management cannot be one-size-fits all, it is incumbent on us as HR professionals to carefully examine our current practices and consider these emerging tools.  We can lead the way by staying aware of the shift that is taking place in the world of performance management and providing our organizations with options that will enable people to use their strengths in the short and long term. Together, this will ultimately accelerate – instead of simply manage – performance.