How 2016 Will Be The Year That Will Transform Performance Management

July 6, 2016

The sheer foundation that kept performance management running for the past 2 decades (if not more) has finally started to unravel. Forced ranking, yank and rank, stack ranking or forced distribution – whatever you’ve called it, the way we drove performance in organizations was by telling one person ‘you’re the best’ and someone else ‘you’re the worst’. No matter the circumstances, context or business. If you were rated better than me then you were given a bigger bonus, salary increase and promotional and learning opportunities.

The wheels are finally coming off. CEB found that 95 percent of managers are dissatisfied with the way their organizations conducted performance reviews, and nearly 90 percent of HR leaders say the process doesn’t even yield accurate information. Even GE, the inventors of the ‘up or out’ forced ranking system, have announced after 3 decades that they will abolish their performance ranking system. Organizations that have vowed to or have already gotten rid of performance ranking are growing with Accenture, Adobe and Eli Lilly the most talked about.

As Max Nisen writes in Quartz:

“The move by more and larger companies away from annual reviews and ratings is well past due. Years of research, from both business school professors and neuroscientists, has found that the practice is ineffective at boosting performance, actively alienates employees, is based on a flawed understanding of human motivation, and is often arbitrary and biased. People simply don’t fit neatly on a bell curve. It ends up being an exercise in paperwork and bureaucracy instead of an agent of change.”

So what are the latest trends in performance management? Let’s take a look at some:

1. Real-Time Feedback

Adobe, the digital solutions provider, is probably the most quoted organization to have moved from annual performance reviews in favor of ‘on-going’ check-ins. The check-ins have line managers and employees share progress on deliverables and performance-enhancing areas to focus on an almost ongoing basis. Ever since, a plethora of large organizations have followed suit, most notably Cargill, Eli Lilly and Accenture.

2. Alignment to Objectives

What good is performing well if the effort isn’t aligned to your organization’s objectives? An important aspect of performance management is to ensure that employees are rowing in the same direction and are completely and transparently aligned. The ‘Objective and Key Results’ model has been gaining significant traction to achieve this (Quora has even created a separate topic on the subject). The model’s focus is on goal setting and has been successfully used in leading tech organizations like Google, Zynga, LinkedIn and of course Intel (its creator). Being originated in the Silicon Valley, it has its own tech solutions.

3. Future and Strength Focused

By design, performance management reviews focus on what occurred over the past period as well as your shortcomings. As Marcus Buckingham writes in HBR:

“While this feels practical, and rigorous – even “tough” – it is also depressingly inefficient. Although we label weaknesses “areas of opportunity,” brain science reveals that we do not learn and grow the most in our areas of weakness. In fact the opposite is true: we grow the most new synapses in those areas of our brain where we have the most pre-existing synapses. Our strengths, therefore, are our true areas of opportunity for growth.”

And that’s the key to the way forward – focus and emphasize on the strengths while eliminating time spent talking about weaknesses.

4. Split-Up Assessment and Development Discussions

Like myself, others have also written on the need to split up performance assessment and development into two separate discussions. Yet several organizations are still stuck with the routine of ‘once a year performance reviews’. The argument is simple and clear:

If you really intend to focus on helping employees further enhance their contributions and performance you shouldn’t allow the consequences of their past performance (and their salary increase) to dominate their mental capacity.

Let’s be honest, in a 30 minutes discussion how well can your team member reflect on their past and design their future? It’s just not going to be a fruitful discussion unless you split them into two separate sessions.

And there you have it, 4 creative and proven techniques that’ll finally transform performance management from being a ‘nightmare’ process to one that actually drives greater and positive output.

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