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The PeopleCap Playbook

Timely insights and actionable people strategies for leaders.

Performance Management is Evolving: The New Paradigm

paradigm shift key on keyboard

The necessity of developing talent is at an all-time high; yet, prehistoric performance reviews roam free – devouring hours of productivity and lowering morale without having any meaningful impact on organizational performance. Most HR departments don’t believe annual performance evaluations provide accurate data, and many managers and employees simply dread the process. In a study by Mercer, 95% of managers reported being dissatisfied with their performance management process and 90% of heads of HR did not feel their system provided accurate information.

In 2015, HBR’s article Reinventing Performance Management chronicled Deloitte’s move to a revolutionary 4-question, post-project survey. Deloitte’s innovation has led many other companies to think differently about performance management and turn the old paradigm on its head.

To evolve your performance management process, consider these 5 steps:

Focus on Growing not Grading

Shift focus from grading past performance to developing future success.In a world where change is the only constant, every employee needs to be growing and developing to stay current. We need to approach performance conversations as teachers with the mindset of “What does this employee need to be successful?” and “What can I do to help this employee grow?”

Talk about Performance Often

In this era of accelerated change, we can barely remember what happened last week let alone 12 months ago!  It is critical for managers and employees to have regular conversations about performance. Gallup found that employees whose managers hold frequent one on ones are 3x as likely to be engaged.

Let Likert Go

Long lists of abstract competencies graded on a Likert scale are not useful to employees trying to improve their performance, and often managers are unqualified to rate employees on each competency. Replacing them in favor of more simple, thoughtful, open-ended questions gives managers and employees something to really talk about. Simple reflective questions such as “What’s going well?” “What’s not going well?” “What’s getting in your way?” drive toward a much more meaningful discussion that leads to better individual and company performance.

Focus on the Outliers

The vast majority of employees do their job well, and completing lengthy evaluation forms to say they are “doing fine” is largely a waste of time. With a few strategic questions, it is possible to identify the highest and lowest performers – and then focus time and energy on providing the attention, development opportunities, and guidance needed by those employees. The key shift is the focus on quickly identifying and then investing time and resources in your highest performers – not just dealing with poor performers.

Help Employees Reach Their Goals

Most managers shy away from asking employees about their personal or long-term career goals. We know that vast numbers of employees change jobs every three years. Not talking about their career goals isn’t going to make employees stay, and in fact, may make them leave more quickly.  Supporting your employees’ personal and professional goals not only demonstrates you value your employees, but also helps avoid disruptive surprise departures. It’s in our best interest to help employees provide their best, most engaged effort while they’re with us, and then help them move on if they choose – either within our organization or outside it.

The new performance management paradigm is engaging, growing, leveraging, and retaining the best people in a highly competitive talent-driven economy. An organization can’t outperform its talent. If your performance management system is not focused on growing and developing your employees, your bottom line will show it.