Financial Services are Seeing a Performance Management Revolution
Financial Giants Are Now Adopting Year-Round Performance Management
This year appears to be a year of evolution for the financial services sector. Whilst the financial services sector has been slower to adopt new performance management trends, major players are now shaking up their approaches to performance management and joining the ranks of companies like Adobe, Gap and Microsoft who have abolished numerical performance ratings for employees in favour of a more progressive approach.
It has often been argued that number-based ratings seriously impact employee anxiety, are over complicated and time-consuming for HR and end up being ultimately counterproductive. Companies the world over are shifting their focus to performance reviews that are frequent, collaborative and forward-thinking, focusing on employee strengths over weakness. This is in line with recent studies that suggest that placing emphasis on employee strengths can increase performance by up to 36%. American Express, Crowe Horwath and Goldman Sachs are just a few financial services that are embracing this new reality.
American Express leading the charge
American Express, the multinational financial services corporation, was ahead of the curve when it revamped its performance management process in 2014. HR focus became more about collaboration, setting clear goals and creating achievable personal development plans with their supervisors, known as their “development partners”.
These development partners are responsible for ensuring regular, effective and productive meetings throughout the year, where employees discuss their progress and successes, as well as areas of concern. These check-ins are one-on-one, regular and constructive, and are complemented by more formal mid and end-of-year assessments.
Crowe Horwath introduces continuous performance management
It has recently been revealed that Crowe Horwath, the global accounting firm, has ditched its traditional annual performance reviews. As of June 1, they have been replaced with a “Measure What Matters” program. This approach is more informal and frequent, allowing for greater communication between managers and employees.
The change came about, according to Julie Wood, the chief people officer, when their annual engagement survey reflected that their existing performance management system was leaving a lot to be desired. They were spending substantial amounts of money without seeing any value in return. The system was traditional in nature, where company-wide goals were cascaded down to employees and staff were marked on a scale from 1 (did not meet expectations) to 4 (constantly meets expectations) during an end-of-the-year review.
Employees now all create a “Measure What Matters” plan in conjunction with their performance managers, wherein they identify and discuss three achievable goals that they should be working toward that year. Meetups are now regular and the goals are dynamic and subject to change dependant on circumstance. Crowe Horwath’s decision to make this change is understandable when you consider that over half of companies who choose to constantly revisit and adjust goals are in the top quartile of financial performance.
Goldman Sachs Group rejects numerical ratings
Goldman Sachs, the multinational banking firm, has received media attention recently for actively deciding to overhaul its performance management system following concerns over the bank’s overall performance. The most significant change is the rejection of its traditional nine-point employee evaluation rating system.
Goldman Sachs’ new method of reviewing performance focuses more on employee strengths and weaknesses. Managers and employees are set to check-in with one another more regularly, and managers are now required to provide employees with detailed summaries as to how they are performing and how they can improve. In this way, Goldman Sachs is accepting a more forward-thinking approach that focuses on employee development and growth. Lloyd Blankfein, Goldman Sachs CEO, calls this “an important investment […] in our people and the future of our firm.”
How can performance management software help?
For those deciding to change their performance management systems, integrate regular communication and boost productivity, performance management software can help organisations to achieve these goals.
The interactive nature of software means that teams can collaborate and assist one another with valuable, real-time feedback, fostering a genuine atmosphere of teamwork. The best performance management software is modelled to reflect a social media platform, making it user-friendly and accessible. Good software also allows employee objectives to be aligned to organisational goals and updated at any time in the year, ensuring objectives are both meaningful and relevant at all times. In this fast-paced and evolving world, paper-based systems are simply not conducive to a dynamic and growing environment. Top organisations the world over are now seeing the advantages of performance management software, and are seeing genuine results in terms of productivity, employee engagement and staff retention.