New Year’s resolutions aren’t just for holiday revelers. HR departments are also reflecting on past accomplishments and looking for ways to ensure good health and prosperity for their organizations — especially if they are frustrated by a lack of performance management results.
Consider the situation: Many are preparing to close out the performance management process for the year, eyeing next year’s goals, and questioning the value of making significant changes or wondering “why not just eliminate it altogether?”
Several high-profile organizations have eliminated performance reviews and/or ratings, citing a host of reasons. Deloitte found that the process of creating and managing ratings resulted in close to two million additional hours of work per year. The reality is that very few have eliminated performance ratings entirely. According to the 2016 Willis Towers Watson Global Talent Management and Rewards Study only 8% have taken such an action.
More effective programs yield better results
For many employees, their poor perception of performance management is due to a lack of manager capacity and capability. More than 75 percent of managers spend fewer than six hours per employee per year on performance management activities, which begs the question: Just how meaningful and relevant is the time spent on performance management?
In many cases, performance management reviews have become simply a compliance exercise with little impact on future results, thus 56% of organizations have spent or plan to spend more time on the right performance management activities.
Effective performance management relies on a continuous discussion-based process that involves providing feedback. It’s not about the quantity of time spent but the quality: How are managers spending their time in those six or so hours? The answer is that too much time is spent on administrative tasks, such as completing forms and gathering performance data, while not enough time is devoted to providing feedback, setting goals and coaching — the very activities that are meaningful to employees and drive performance.
Facebook’s experience (as highlighted in “Let’s Not Kill Performance Reviews Yet” from Harvard Business Review) shows that a properly executed performance management process can be extremely valuable. Because of their core value of openness and transparency, Facebook chose to keep performance reviews for reasons of fairness, transparency and development.
Facebook begins with peer reviews and shares them with managers as well as employees. Managers also review an employee’s performance with a team of analysts who review it for bias. Finally, ratings are translated into compensation. Managers have no discretion in this formula-driven process — if someone excels, their bonus multiplier rises according to an equation.
Reviews should reveal development strengths and opportunities
Performance reviews provide the opportunity to discuss key strengths, and just as importantly, where an employee needs to develop. Facebook sets super-stretch goals to provide developmental opportunities. The reason? Research indicates employees are often motivated when success is a coin toss. In other words, goals presenting an equal chance of failure or achievement may push employees to limits and capabilities they didn’t realize existed.
Rather than throwing out the entire process, Facebook opted to build a balanced culture where employees approach performance management with curiosity and a learning orientation — and the organization recognizes and rewards growth.
Managing performance in today’s talent ecosystem
Reports of the “death” of performance management may be exaggerated. Research indicates that we need to move to the next generation of performance management which includes the distinctive micro processes of performance and career development discussions and talent review working in tandem as part of an overall performance management ecosystem.
How each employer gets to the next generation of performance management will certainly vary. But focusing on enhancing the quality of goal setting, increasing the frequency of feedback, and improving the quality of performance and career development conversations will go a long way in taking the performance management process from a rigid, once-a-year exercise with little to no value to creating a more engaging, satisfying experience for both the employee and the organization.
This is not the end of performance management, but simply the next iteration.