Prediction: Redesign of Performance Management

Only 8 percent of global organizations believe their performance management process is worth the time they put into it, but “the race is on to change that,” according to Josh Bersin, principal and founder of Bersin by Deloitte, a research and talent management consultancy.

Writing in the January/February issue of HR Magazine, one of Bersin’s top predictions for the new year is that performance management will continue to be redesigned. More than 70 percent of the companies Deloitte recently surveyed reported they were re-engineering their performance management process, “and in 2015 more companies will likely follow suit,” he said.

Companies are struggling to fix their “overly complex, unhappy performance management process to make it simpler and to put more focus on development,” Bersin noted, citing research by Deloitte and others. “Numeric ratings, rankings and formal evaluations without positive feedback may create a culture of reduced performance.”

When redesigning performance management, the following issues should be addressed:

• Performance coaching, development and evaluation are among the most important parts of the process, so simplify the process to help managers focus here first. Train managers on how to coach, give feedback and regularly check in with employees.

• Goal management, once considered a top-down cascading process, should be more agile, frequent and transparent.

• Numeric ratings should play a smaller role. New values-based scales and other methods give employees feedback and advice, not just a “grade.”

• The 1:1 match between rating and compensation is becoming a thing of the past. Forward-thinking companies eliminate or separate these concepts entirely and make pay adjustments based on a combination of performance, customer impact, skill scarcity and the competitive nature of employees’ positions.

• Large HR software vendors are starting to build performance management tools that are more agile. A number of new vendors are launching low-touch, easy-to-use performance and goal management tools.

Cargill: Performance Management Transformed

One example of an HR professional who is “making it happen” is LeighAnne Baker, chief HR officer and corporate vice president at Minneapolis-based Cargill.

Baker has won honors for leading a team that transformed performance management at the agricultural giant from a once-a-year event to an everyday conversation, through its Everyday Performance Management system launched in 2012. “We have been focused on continuous improvement ever since,” she told HR Magazine. “We shifted the focus from a cumbersome annual process to ongoing discussions focused on feedback, development, coaching and trust,” said Baker. “The system is built on the notion that day-to-day conversations can predict performance better than forms and scales. That’s why we took the groundbreaking step of eliminating ratings.” The results thus far indicate success. “We found an 8 percent increase in respondents who said they received useful development feedback, a 9 percent rise in those who felt valued and a 10 percent increase in engagement.” HR Magazine’s profile also includes audio remarks by Baker on the importance of business acumen.

LeighAnne Baker

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter @SHRMsmiller.

Related SHRM Articles:

Taking the Dread out of Performance Reviews, SHRM Online Employee Relations, December 2014

Improving Performance Evaluations Using Calibration, SHRM Online Compensation, May 2014

Quick Links:

• SHRM Online Compensation Topics & Strategy