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The rush to replace performance management with agile, instantaneous and individualised feedback may sweep away the good with the bad.

These leading companies, such as Deloitte, Accenture and Adobe have recognised that traditional people management systems fail to deliver the promised productivity results while undermining employee engagement and wasting billions of dollars in lost time.

We argue that the villains in the performance management story are rankings (especially stacked rankings), and opaque, unpredictable and arbitrary objectives.

Regular, formal meetings backed by consistent expectations are not necessarily bad. They may even be essential. Yet there is an emerging risk that rapid change will leave employees and managers alike lost in a sea of unstructured data.

Brave New World

Some, like Deloitte (who hope to take their own solution to market) are developing in-house platforms for feedback and commenting, but there are also new players in the HR tech space offering applications to facilitate this emerging approach.

While most of the discussion about how to manage without performance management focuses on principles rather than techniques or technologies, it is already clear the experimental systems now in play have several features in common:

  • An immediate end to rankings and ratings
  • The elimination or downplaying of regular review meetings in favour of short, frequent “coaching” discussions
  • An emphasis on 36⁰⁰ feedback from managers and peers
  • Empowerment of employees by allowing them to set goals or ask for feedback on specific topics or activities
  • Use of pulse surveys and similar techniques to regularly close the feedback loop

All of these changes are great. However, they point to a situation where some of the major downsides of existing performance management systems are actually replicated, disguised by the allure of the new and the deployment of buzzwords like “agile” and “empowerment”.

Part of the problem lies in the enthusiasm for doing away with top-down direction and complex structures.

Waving or Drowning?

In time the employee may flourish, setting new goals beyond their original position, jumping into projects, contributing to other teams, taking on extra responsibilities and looking ahead to how she can add more and more value to the company.

So far, it sounds like a worker’s paradise.

Unfortunately, the risk is that many hard-learned lessons of the past have been forgotten.

  • What happens if this continuous feedback environment is a free-for-all? How, for example, are the goals people set constrained or standardised?
  • What happens if the feedback being received is subjective or imprecise?
  • How are promotion, remuneration and separation decisions made or justified? What about access to opportunities like secondments and projects?
  • How does an employee get to add stretch goals or goals related to career ambitions to their feedback process? Is there any way to ensure people across your business can include similar things? What happens if they don’t?
  • How are manager biases controlled in this environment? And how can employers be sure that the feedback channel isn’t used to reinforce an exclusionary workplace culture?

There are many reasons to be cautious, including the danger that inconsistency in goal setting, assessment and development will enable discrimination or the perception of unfairness. Also, if goals and assessments are unregulated, senior leaders will be forced to compare apples with oranges and so lack the tools to make effective strategic decisions.

Reasons for Change

As Yahoo! and others have discovered to their cost, organisations using old-fashioned people management approaches cannot escape bias-related litigation. Change resistant organisations will also be unable to adopt new forms of organisational structure and thus to adapt. Those organisations trapped in a world of rigid hierarchies and cumbersome decision processes will be burdened with unacceptably-low staff utilisation rates and will struggle to innovate.

Employee disengagement and high turnover will continue, getting worse as more adaptive companies win the war for talent.

To avoid these pitfalls businesses must strive to become adaptive learning organisations within which people move freely to use all their talents as needed.

To enable this, a development- and talent-focussed approach to people management is essential. Businesses must also be providing constructive, real-time feedback, and freeing frontline managers to lead and coach.

A “Post-Performance” People System

This combines the key features that empower people to flourish in their roles with structures that clearly define what success looks like and the expectations the organisation has of its people.

The key features of this “post-performance” people system include:

  • individual assessment without ratings,
  • an emphasis on coaching and professional development,
  • regular or real time feedback and data gathering,
  • empowerment of employees and frontline managers to be able to individualise the career journey

Getting the most out of a new people system also requires adopting a new organisational structure that is more flexible, team focussed and networked (a topic we will address in an upcoming white paper). To make this blend of systems and flexible opportunities work managers will still need quarterly, half-yearly or annual reviews where performance is discussed and goals are set within some kind of common framework.

The good news is, your people won’t hate these meetings nearly as much once they makes sense and deliver real benefits for all concerned.

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Originally published at capabilitybuilder.com on May 7, 2016.

Capability Builder provides software and professional development to streamline people management processes and build the confidence and capability of teams

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