What does performance management look like in 2016?
5 companies have led the way in setting new Performance Management trends
2015 was an unprecedented year for those HR professionals who are responsible for performance management. It was the year that big-named organisations came out and said that traditional performance appraisals were no longer working for them, the most notable being General Electric whose infamous ‘rank and yank’ performance management approach was, at last, put to bed.
With some analysts predicting that half of organisations will kill either performance ratings or annual reviews by 2017, what will be the performance management trends for 2016? Rather than guessing, we’ve compiled a summary of the revamped performance management processes of five well-known global organisations.
Adobe were the forerunners of change when they abandoned annual performance appraisals back in 2012. They replaced them with regular ‘check-ins’, supported by frequent feedback – both positive and constructive. There are no ratings or rankings and they allow different parts of the organisation to determine how frequently they should hold check-in conversations according to their work cycles.
The result has been a marked increase in employee engagement, with voluntary turnover decreasing by 30% since check-ins were introduced.
Deloitte were the first big name to announce in 2015 that they were scrapping once-a-year performance reviews, 360 degree feedback and objective cascading. This was after they calculated that these processes were consuming 2 million hours a year across their organisation.
Deloitte’s new process requires every team leader to check-in with each team member once a week to discuss near-term work and priorities, comment on recent work and provide coaching. To ensure these check-ins take place frequently, the check-ins are initiated by the team members rather than the team leaders.
These weekly check-ins are supported by quarterly reviews in which team leaders are asked to respond to four future-focused statements about each team member. Rather than asking team leaders what they think of the team member which is what traditional performance ratings do, they ask what the team leader would do with the team member.
3. General Electric
Under the reign of its former CEO, Jack Welsh, General Electric was the most well known proponent of annual performance ratings and forced distribution curves. For decades, GE operated a ‘rank and yank’ system whereby employees were appraised and rated once a year, following which the bottom 10% were fired. Not exactly a recipe for employee engagement.
In 2015 GE announced that it was replacing this approach with frequent feedback and regular conversations called ‘touchpoints’ to review progress against agreed near-term goals. This is supported by an online and mobile app, similar to our own Clear Review app, which enables employees to capture progress against their goals, give their peers feedback and also request feedback.
Managers will still have an annual summary conversation with employees where they look back at the year and set goals, but this conversation will be more about standing back and discussing achievements and learnings, and much less fraught than their former annual reviews.
As of September 2015, Accenture, one of the largest companies in the world, disbanded their former ranking and once-a-year evaluation process. Like GE, Accenture have decided to put frequent feedback and conversations at the heart of their new process, and focus on performance development, rather than performance rating.
As Ellyn Shook, Chief HR Officer at Accenture put it, “Rather than taking a retrospective view, our people will engage in future-focused conversations about their aspirations, leading to actions to help them grow and progress their careers.”
Like Adobe, Cargill, the US food producer and distributer, started to transform its traditional performance management processes back in 2012 when it introduced what it called ‘Everyday Performance Management’. It removed performance ratings and annual review forms and instead focused on managers having frequent, on-the-job conversations and giving regular, constructive feedback. They have made this work by:
- Regularly rewarding and recognizing managers who demonstrate good day-to-day performance management practices.
- Sharing the experiences and tips of their successful managers.
- Holding teams accountable for practicing day-to-day performance management.
- Building the skills needed to succeed at Everyday Performance Management, including effective two-way communication, giving feedback, and coaching.
The outcome has been impressive with 70% of Cargill employees now saying they feel valued as a result of their ongoing performance discussions with their manager.
When we look at what these 5 organisations have implemented, we can see some very clear trends emerging which are likely to form the basis of performance management for a large number of organisations in 2016. These trends are:
- Regular one-to-one performance conversations or ‘check-ins’, initiated by the employee.
- Frequent, in-the-moment feedback from peers and managers, both positive and constructive.
- Near-term objectives rather than annual objectives. Setting and reviewing objectives regularly rather than once a year.
- Forward-looking performance reviews focusing more on development and coaching and less on assessment.
- Dropping performance ratings.
- Performance processes supported by mobile-friendly, online performance management apps.