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Goodbye performance management, hello performance enablement

Year-end reviews are becoming a thing of the past. Here's why.

Samantha Carr | August 12, 2016

Ditching the rating system and reinventing performance management is a hot topic right now. Big organisations like GE Electric and Cargill have been leading the way, while others are struggling to catch up and work out what this means—and more importantly—decide if it’s the right move for their business.

Before deciding to do away with something, we should first consider why we have it in the first place and if the original rationale still applies. The traditional performance management approach involves annual objective-setting and mid/end-year reviews of those objectives by your line manager.

Then there's often a peer ranking or calibration of all employees. Good practice is to support this with more regular informal reviews, but this is often forgotten about, and people only really think about performance when they’re in a mad rush for end-of-year feedback (by which time no one can remember what anyone did). All in all, it’s a process that Deloitte found was costing them 2 million hours a year, most of which was senior managers’ time, having discussions about employees rather than with them.

At a basic level, performance management is about what it says on the tin—managing the performance of people to ultimately drive success for the organization. But is managing the performance of people still the best way to drive success?

Let me be candid: I’m not suggesting the premise is entirely wrong, but I do think the way it has evolved is not fit for the future. And there are three main reasons for that:

1. Performance matters, but…

In the words of Simon Sinek, let’s start with the “why.” Why does performance matter? Because it drives outcomes, and outcomes drive success. Performance is still the critical enabler for any organisation. But what most organisations are getting wrong is their approach to achieving it.

The “why” is right, but the “what” is wrong. Management is defined as “the process of dealing with or controlling things or people.” When I think about why my organisation has performance management, it’s not to “deal with or control” what our people do; it’s to enable our people to succeed so that we are collectively more successful.

Performance management was born in an era when conditions and motivations for work were very different—employers needed a mechanism to drive productivity and provide structure. Success meant hard work and lots of it—what you put in, you got out. In today’s world, success is about smarter outcomes. If you speak in buzz words, smart means efficiency, agility, and innovation. In lay terms, it means trusting and empowering people to get the job done the best way possible. People don’t need managing anymore—they need enabling.

2. The world of work is changing, fast

Technological and social progress has drastically increased the speed of change. As a result, business objectives are constantly out of date, and organisations need to be able to adapt quickly. Annual performance objectives, a key characteristic of traditional performance management, make no sense anymore. A key feature of emerging performance management processes is frequent short-term objectives and regular check-ins, vs. an annual review.

3. The people in the workplace are new

By 2020, 50 percent of the workforce will be millennials. This will increase to 75 percent by 2025. This generation is more ambitious than any before it, and potential career progression is the top priority when considering an employer. On top of that, learning and development is the first choice benefit.

Waiting 12 months to find out how you’ve performed and get feedback will not be acceptable to the majority of our future workforce. And why should it be? It’s not how we operate in our day-to day lives, which are centred around a culture of immediate feedback. Parents don’t wait until the end of the day to tell their children when they’ve been good or bad, because by then they won’t be able to associate the behaviour and learn from it.

Feedback is best delivered in the moment. Even as consumers, we now provide immediate feedback, whether via Twitter or the smiley face scale at airport security. Along with career progression, this generation also wants a variety of experience and will look to more than one line manager to provide opportunities. Hence, another principle of new-style performance approaches is continuous feedback from multiple sources.

So, organisations need to start enabling their people to achieve short-term outcomes, via continuous and varied feedback. It sounds easy, so it may not be surprising that 50 percent of the F500 are expected to make this switch by the end of next year. However, there are some things to watch out for:

  • Firstly, the organisation needs to be set up in the right way to manage this nimbler, agile approach. Having the right collaborative tools and data management is critical, and organisations need to be looking at how to get the right technology in place to enable the change. Cloud technology is making it easier, but this approach still requires buy-in, investment, and well-considered implementation.

  • Secondly, it’s important to recognize that this is a cultural and behavioral change, not a process one. Without investing in the right change management, all the high-tech collaborative tools and data in the world won’t help you make meaningful changes to your approach to performance.

Now, more than ever, people are the key to performance—and it’s what you do to realize this that will count. Performance management is dead, but performance enablement is just beginning. Are you ready?

Samantha Carr originally published this post on LinkedIn Pulse.

Samantha Carr is no longer with Slalom.

Photo of Samantha Carr

Samantha Carr is a solution principal in Slalom's London office and has a passion for people and how they use digital technologies to change the way we work. Samantha has worked on people change and HR transformation programmes for the past 12 years and is a firm advocate of HR’s strategic role in defining, shaping, and evolving talent to drive success.