It's no secret that the age-old practice of yearly performance reviews is on its way out. From astounding statistics correlating the traditional yearly review to less-than-positive results for major companies, it's safe to say that yearly performance reviews are largely becoming defunct. More than half the executives (58%) believe that their current performance management approach drives neither employee engagement nor high performance. (According to a Public survey report by Deloitte).
The traditional process of performance management faces the biggest challenge of unconscious bias. It entails a "batch style" review process wherein the managers are asked to evaluate their employee's performance across a slate of performance criteria. This leads to evaluation of the individual based on perceptions of his rater.
Organizations are now increasingly moving away from the "Bell curve" system of appraisal which is all about force ranking employees to label them as top, average and bottom performers with fixed percentages as to resemble a normal distribution curve for the entire workforce. To mention some of the fundamental limitations of bell curve are that it adopts a universal approach and lacks a differential workforce perspective. It creates a culture where employees are made to compete with each other which are not healthy for achieving the common goals of business and in turn a misalignment to the organizational values and culture. It also questions the very existence of HR when we assume that certain percentages of our employees are not just good enough at their jobs.
More than half the executives (58%) believe that their current performance management approach drives neither employee engagement nor high performance.
Organizations are undergoing a complete overhaul, reframing the reviews to focus more on what the leader would do with each team member moving ahead by practicing feed rather than an annual employee evaluation method to decide increments and promotions. Their focus lies on empowering the employees and making them more accountable for their past work and future endeavors by incorporating the practice of constant introspection. This strengthens the belongingness of the employee towards the organization as well as the alignment to its culture and values.
The new age performance system therefore must focus on
- Recognize performance
- Fuel performance
- Linking the ethos and values of the individual to the cultural fabric of the organization
The Performance Management system shifts its focal point from the "WHAT" aspect to, "WHAT" & "HOW" of the performance. It's not only what is achieved, but also how it is achieved. It takes into cognizance the competencies and behaviors demonstrated while achieving the agreed upon targets. And it doesn't stop at that; it also takes into account whether these competencies and behaviors are aligned with the overall culture of the organization. When individuals' performances are recognized and discussed on both these aspects WHAT & HOW, the whole process swings to a development conversation enabling a clear vision on one's career growth/progression.
It is based on the concept of workforce of one-not one-size-fits-all, which is all about differential approach of performance management. Performance management must become more personalized, more real time, and more progressive in terms of updating goals that align to the rate of change in organizations. The process needs to focus on maximizing the career experience to achieve both business results and personal satisfaction.
Workforce of one approach in performance management processes put people in a growth mindset; individuals who are operating from a growth mindset outperform those that do not.
The key objective is to Fuel Performance. This can be facilitated through conducting continuous feedback dialogues on target achievement and development throughout the year. Ongoing conversations that provide employees with feedback and coaching have the most impact on results and career success. One way to go about it is through weekly check-ins with managers and leaders, which has a direct effect on performance overall. However, recognizing that team leaders are very busy, the onus must be on the team member to reach out to their supervisor for the check-ins. Hence, the team member's level of effort and commitment to the check-ins directly impacts their performance. Online tools that are widely available make the capturing of these dialogues not just fast but very convenient as well.
When individuals' performances are recognized and discussed on both these aspects WHAT & HOW, the whole process swings to a development conversation enabling a clear vision on one's career growth/progression.
So, at the end of every project (or quarterly for long-term projects), organizations ask its managers to respond to these four future - focused statements :
- Given what I know of this person's performance, and if it were my money, I would award this person the highest possible compensation increase and bonus.
- Given what I know of this person's performance, I would always want him or her on my team.
- This person is at risk for low performance.
- This person is ready for promotion today.
With the employee centric as the focus, the combination of Feed Forward and Continuous Feedbacks on Individual's career aspirations aligned to the organizational goals and values will bring the desired results of upward swing eliminating the ill effects of current Performance Management Practices.