Harvard Business Review: Employee Performance Management is Broken

The old, tired methods of employee performance management are broken.

Astute organizations are taking note and doing something about it.

That shift is a topic of the latest issue of the Harvard Business Review, in a piece penned by employee engagement expert Marcus Buckingham of “Strengths Finder” fame, and Ashley Goodall, director of leader development at Deloitte Services in New York.

The authors describe how Deloitte realized their existing process for gauging employee performance ¾ then training, promoting and paying employees accordingly ¾ was increasingly out of step with company objectives. In fact, 58% of Deloitte executives believed their current approach drove neither employee engagement nor performance improvements.

“We are in need of something nimbler, real-time, and more individualized,” the authors write. “Something squarely focused on fueling performance in the future rather than assessing it in the past.”

To that end, Deloitte is ditching tools and approaches long held as progressive but no longer effective in today’s work environment:

“[We] will have no cascading objectives, no once-a-year reviews, and no 360-degree-feedback tools,” say Buckingham and Goodall. Rather, the hallmarks of Deloitte’s new approach are “speed, agility, one-size-fits-one, and constant learning, and it’s underpinned by a new way of collecting reliable performance data.”

The article describes Deloitte’s process of researching and developing its new performance management approach in great detail (which you can read here). Below are some highlights:

Learning that existing methods asked the wrong questions to the wrong people at the wrong time, the authors explained, “people may rate other people’s skills inconsistently, but they are highly consistent when rating their own feelings and intentions. To see performance at the individual level, then, we will ask team leaders not about the skills of each team member but about their own future actions with respect to that person.”

At the end of every project, team leaders at Deloitte will be asked four future-focused statements about each team member:

• Given what I know about this person’s performance, and if it were my money, I would award this person the highest possible compensation increase and bonus.
• Given what I know about this person’s performance, I would always want him or her on my team.
• This person is at risk for low performance.
• This person is ready for promotion today.

“In effect, we are asking our team leaders what they would do with each team member rather what they think of that individual,” the authors write. “When we aggregate these data points over a year, weighing each according to the duration of a given project, we produce a rich stream of information for leaders’ discussions of what they, in turn, will do ¾ whether it’s a question of succession planning, development paths, or performance-pattern analysis.”

Describing the outcome of this new approach, the authors explain that while traditional ratings are a distillation of the truth, “we want our organizations to know us, and we want to know ourselves at work, and that can’t be compressed into a single number.” We now have the technology to accomplish that goal, they conclude.

Points to ponder:

• How effective are current assessment methods in improving employee performance and engagement in your organization?
• Do current methods enable the right employees to be rewarded, coached or admonished at the right times?
• Are employees increasingly satisfied or frustrated as a result?
• What aspects need to be tossed or altered to meet goals?