There is a big problem with the traditional model of performance management and performance review: it doesn’t work. This is something we’ve known for a while, but most organisations, and indeed most HR departments, still haven’t changed their approach as a result.
There are several fundamental problems with performance management as we know it. Here are my top three:
- It’s just too slow. Organisations need to be agile and flexible to survive. They need to respond rapidly to changing market conditions, consumer demands and developing technology. If you ask many organisations what they want from their people, they will say them to be empowered, to show initiative, to be innovative. A once a year review with rigid SMART objectives is at odds with these aims.
- Typical ratings systems are nothing short of disastrous. It is impossible to design a one that can adequately reflect a whole year’s worth of performance. Instead, ratings focus the dialogue between the employee and the manager on the wrong thing. The conversation should be about performance, development, planning – not a number or percentage. All highly demotivating for your people.
- A focus on compliance. The definition of success for most performance management systems is the number of reviews that have been completed. But all that really tells you is whether managers can complete a process. It tells you nothing about quality or outcomes – and it forces HR into a chasing role.
Why do we persist with the traditional performance management methodology? Maybe because we just don’t know what to do instead. Some organisations have made changes. Some have removed their ratings systems. Others have got rid of the annual review altogether – but they remain in the minority, for now.
How to do performance management better
So what can an organisation do differently? Here are three simple steps you can take to make your performance management processes more effective, and improve the experience for employees and managers alike.
- Train your managers. If you want people to be having great conversations about performance then you need to provide them with the skills to be able to do so. Performance conversations should be coaching led. Managers need to ask great questions – so train them to do this rather than fill out forms.
- Encourage employees to own the process. Let them schedule performance meetings (as often as they need them), seek out feedback on their own performance, and complete any paperwork that’s required. Empower people to review themselves rather than simply provide them with feedback.
- Remove your ratings – especially if they don’t have a consequence. Sometimes, performance ratings link to pay reviews or bonuses. Where they do not, take them away. Let your people talk about their work, their ambitions and their personal development, rather than trying to fit them into a definition on a form.
When it comes to performance management, we don’t have to do what we have always done. The time for change, is now!
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Written by Tim Scott
Tim Scott is a People Director, HR writer and speaker. Before founding The Work Consultancy, he spent 20 years in HR roles, helping transform people practices.