Have you ever been in a company that had a yearly performance management review, perhaps a set of numbers to rate your performance based on a set of five or so objectives? Did that system help you perform better and motivate you based on the feedback? Did your yearly number help with your development?
Research on Traditional Performance Management Systems
According to Gallup, 26% of employees say their performance is evaluated less than once a year, while 48% say they are reviewed annually.
Only 29% of employees strongly agree that the performance reviews they receive are fair, and only 26% strongly agree that they are accurate.
Only three in 10 employees strongly agree their manager involves them in goal setting; these employees are four times more likely to be engaged than other employees.
Only three in 10 employees strongly agree there is someone at work who encourages their development.
These findings and many more like them tell us very clearly that these types of traditional “performance management” systems are failing in plain view, and everyone seems to know it. Yet many companies simply keep doing it! These systems are designed for compliance and administrative ease rather than to motivate, improve and reward performance.
I was fortunate enough to be part of a team that completely upended this traditional approach and went to a new approach which was designed to be employee centric, conducted on a regular basis, accomplished where/ when performance happens, supportive, technology enabled and developmental without a number tag.
Appreciative In Flow Approach
The team designed an appreciative approach that placed the emphasis on once a week or once every two weeks discussions about the work between supervisors and teams.
The discussions were based on some key questions such as:
- What have you achieved this week?
- What prevented you from achieving more?
- How can I help you break through any barriers you face?
- How can I help with resources, training and development?
There was an app which supervisors and teams could record that they had the discussion (this is what we measured centrally) and they could put in notes about those discussions and follow up in real time if need be.
Supervisors encouraged the teams to uncover issues with process, technology, resources and anything else that could hinder them in their work and many small continuous improvement projects were addressed as a result.
In-Flow Reduction of Administration and Meeting Time
Since the approach was “in-flow”, meaning part of the work supervisors and teams did as a matter of course and app enabled in real time, we were able to give back half a million hours of administrative and meeting time, which was associated with the old system approach. That alone was a very compelling ROI.
Company Performance Improved
When the system was implemented, the company had the best three years of business performance in its history. That is an even better ROI and the last engagement survey done was very strong.
The lack of number ratings was irrelevant to compensation decisions. Supervisors had weekly and bi-weekly records on the app. Multiple observations and discussions with the teams made it easy to support their pay decisions with rich data gathered over a year on a regular basis.
Performance Improvement Cases
The Performance Improvement Plan, that was used about 1% of the time, was still in place for anyone who was struggling and for some reason performing poorly. That process remained for due process in the sad event of separation and legal cases.
It is clear from the research and data that traditional performance management systems work very poorly at managing and improving performance. Our advice is to take a look at how your company manages performance today and decide if that is a competitive advantage for your company. There are ways that best fit you and your circumstances that can allow performance management to be a positive advantage for the people who work there and the company itself.
Author: Patrick Boyle is the VMEC Center Director and CEO. Before joining VMEC, his most recent role was that of Senior Vice President and Chief Learning Officer at Underwriters Laboratories (UL) and prior to that, Patrick was President of the UL Knowledge Services Business, providing knowledge, education, training and advisory services to manufacturers around the world.