We have watched the recent turmoil over performance evaluations is fascinating. If you only paid attention to industry buzz, you might think a world-wide revolution is taking place in performance management that will cause the practice to end next week.
We’ve been here before. We were discussing performance management with W. Edwards Deming nearly 25 years ago, and he was talking about it decades before that. We were at a Deming training seminar where he discussed the concept that organizations should abolish the concept of the annual review in favor of constant feedback.
There is now a new momentum for change, but like many before us, we expect change to be difficult for most organizations.
Why Performance Management is So Hard
We can identify three factors preventing many organizations from changing their performance management practices:
- rigid pay for performance practices linked to fiscal cycles,
- difficulty of organizational culture change, and
- lack of optimal selection, coaching, and support of talent managers.
Fiscal Cycles
In organizations that have a rigid schedule of goal setting, annual performance reviews, and merit pay based on performance, cultures have developed where at review time employees want the answer to only one question: How much will I get?
Employees don’t really hear anything else but that answer, so discussions about accomplishments, performance, and development go unheeded. We have worked with organizations many times over the past fifteen years who were uncoupling performance reviews and development discussions, but many are still tied to their pay for performance plans.
Rob Budzinski, Vice President of Professional Services at Aasonn, thinks much of the current talk is just attention-grabbing. He said, “It is very hard to give compensation if you do not have an overall PM rating. There is a trend toward regular feedback throughout the year, but I have not seen any major shift away from an annual review.”
Cultural Barriers
The organizations that are in the news about changing performance management processes are embarking on long-term cultural change efforts. Without cultural alignment, there is little hope for success.
We have seen some failed attempts at changing the review process. None of the failed attempts was part of an organizational cultural change effort. Here are two examples.
- About ten years ago, we worked with a logistics company that had decided yearly evaluations should not be the only conversation about performance. They settled on three quarterly check-ins and an annual review. Managers complained they were too busy to do it. The company reverted back to annual reviews.
- In another project, we provided the means for both employees and managers to enter performance and development notes at any time during the year. After six months, they evaluated the participation level. There were two notes. Not notes for two employees – two notes.
What happened in both those cases was that those organizations did not make an attempt to change their culture. They expected the software to do it for them.
Talented Managers
In most organizations, good managers are stretched thin. They find it hard to stop the momentum of daily crisis management to spend quality time with employees. Unless the organization places a high value on the time managers spend with their people, we cannot expect improvement.
There is a shortage of talented managers – not because there is a shortage of people with the talent to manage well, but because the talent is not in the right place. In their 2016 State of the American Manager report, Gallup reported that only 18% of managers have the talent to lead, and 82% do not.
The mismatch is not because the talent doesn’t exist. Gallup reported that 10% of people have the talent to be excellent leaders, and 20% more can learn the skills. Perhaps a better selection processes might be part of the solution.
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Hope for the Future
There seems to be a general consensus that three practices would improve performance management.
- Performance feedback should not be an annual event. It should be an ongoing in-the-moment conversation.
- Performance objectives should be of aligned with organization objectives and strategy, and should be of short duration with frequent progress checks.
- Development goals should be aspirational and coupled with frequent coaching.
Talent management software has had the capability to deliver the processes to support this approach for a long time. We have been working with it since 2005. What has been lacking is the supporting culture and organizational change efforts.
Thought leaders have made culture a foundation of organizational strategy, and people leaders are listening. We have high hopes there may be enough momentum now for a lasting change.
What are your thoughts? Tell us how your performance management system is working.
Use the form below to add your comments. Disagreement is welcome.
References
Groscurth, Chris. "Managers Could Do a Lot Better at Performance Management." Gallup. June 30, 2015.
"State of the American Manager." Gallup.com. 2015.
Hearn, Stuart. "Times Are Changing: The Future of Performance Management and Reviews." Business.com. February 17, 2016.
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