Written on October 2, 2017 at 12:31 pm
It’s no secret that the age-old practice of yearly performance reviews is on its way out. From astoundingstatisticscorrelating 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. But how should it be replaced? Surely, we still need a system to both measure the performance of our teams and create a roadmap of growth and engagement for them, right? So, what other models are out there?
Deloitte, a global company with 200,000+ employees worldwide, set out to reinvent the way they approach performance reviews after tallying the number of hours the organization spent on performance management: an astounding 2 million hours a year. They also discovered that the current rating system produced data that relied more on the evaluator than it did on the person being evaluated.
So, Deloitte did a complete overhaul, reframing the reviews to focus more on what the leader would do with each team member moving forward rather than how they would rate them on their past work. They started by identifying new goals for performance management overall. Here’s what they came up with:
- Recognize performance.
- See it clearly.
- Fuel performance.
Recognizing and seeing performance go hand-in-hand. Deloitte discovered that they needed to do both without relying on an innately unreliable rating system of peers. “People may rate other people’s skills inconsistently, but they are highly consistent when rating their own feelings and intentions,” wrote Marcus Buckingham, performance management expert, and Ashley Goodall, director of leader development at Deloitte, in an article for Harvard Business Journal in regard to the overhaul. “To see performance at the individual level, then, we will ask team leaders not about the skills of each team member but about their own future actions with respect to that person.”
By pivoting the questions they were asking to move away from the skills of the person being evaluated and toward the feelings and intentions of the person giving the evaluation, they found that they received more accurate feedback. So, at the end of every project (or quarterly for long-term projects), Deloitte asks their team leaders 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.
Using the answers to these future-focused questions, leaders can directly move into conversations about promotions, improvements, etc.
The third and final objective naturally became to fuel performance. One way Deloitte did this was through weekly check-ins with team leaders, which had a direct effect on performance overall. However, recognizing that team leaders are very busy, Deloitte puts the onus on the team member to reach out to their supervisor for the check-ins. Coming full-circle, the team member’s level of effort and commitment to the check-ins directly impacts their performance.
From pivoting the conversation toward the future rather than the past to making an effort to fuel performance, Deloitte is just one example of a company that is at the cutting edge of performance management. For more cutting-edge ideas and topics in the world of Human Resources, visit theSmartHRblog.
Source: Reinventing Performance Management, Harvard Business Review
2. Deloitte saved 2 million working hours per year with weekly check-ins
Deloitte was the first big name to announce in 2015 that it was scrapping once-a-year performance reviews, 360-degree feedback and objective cascading. This was after it calculated that these processes were consuming a remarkable 2 million hours a year across the organisation.
Deloitte’s new process requires every team leader to check in with each team member once a week to discuss near-term work and priorities, comment on recent work and provide coaching. To ensure these check-ins take place frequently, the check-ins are initiated by the team members, rather than the team leaders.
These weekly check-ins are supported by quarterly reviews in which team leaders are asked to respond to four future-focused statements about each team member. Rather than asking team leaders what they think of the team member, which is what traditional performance ratings do, they ask what the team leader would do with the team member.
3. General Electric put an end to ‘rank and yank’ performance management
Under the reign of its former CEO, Jack Welsh, General Electric was the most well-known proponent of annual performance ratings and forced distribution curves. For decades, GE operated a ‘rank and yank’ system, whereby employees were appraised and rated once a year, following which the bottom 10% were fired. Not exactly a recipe for employee engagement.
In 2015, GE announced that it was replacing this approach with frequent feedback and regular conversations called ‘touchpoints’ to review progress against agreed near-term goals. This is supported by an online and mobile app, similar to our own Clear Review performance management tool, which enables employees to capture progress against their goals, give their peers feedback and also request feedback.
Managers will still have an annual summary with employees, looking back at the year and setting goals, but this conversation will be more about standing back and discussing achievements and learnings, and much less fraught than annual reviews.
4. Accenture abandoned ratings for performance development
As of September 2015, Accenture, one of the largest companies in the world, disbanded its former ranking and once-a-year evaluation process. Like GE, Accenture has decided to put frequent feedback and conversations at the heart of its new process and focus on performance development, rather than performance rating.
As Ellyn Shook, Chief HR Officer at Accenture, stated: “Rather than taking a retrospective view, our people will engage in future-focused conversations about their aspirations, leading to actions to help them grow and progress their careers.”
5. Cargill introduced on-the-job conversations in place of annual appraisals
Like Adobe, Cargill, the US food producer and distributor, started to transform its traditional performance management processes back in 2012, when it introduced ‘Everyday Performance Management’. It removed performance ratings and annual review forms and instead focused on managers having frequent, on-the-job conversations and giving regular, constructive feedback. They have made this work by:
- Regularly rewarding and recognising managers who demonstrate good day-to-day performance management practices.
- Sharing the experiences and tips of their successful managers.
- Holding teams accountable for practising day-to-day performance management.
- Building the skills needed to succeed at Everyday Performance Management, including effective two-way communication, giving feedback, and coaching.
The outcome has been impressive, with 70% of Cargill employees now saying they feel valued as a result of their ongoing performance discussions with their manager.
When we look at what these five organisations have implemented, we can see some very clear trends emerging which are likely to form the basis of performance management for the years to come. These trends are:
- Regular one-to-one performance conversations, or ‘check-ins’, initiated by the employee.
- Frequent, in-the-moment feedback from peers and managers, both positive and constructive.
- Near-term objectives rather than annual objectives. Setting and reviewing objectives regularly, rather than once a year.
- Forward-looking performance reviews, focusing more on development and coaching and less on assessment.
- Dropping performance ratings.
- Performance processes supported by mobile-friendly online performance management software.