According to Brandon Hall Group’s Performance Management study, 72% of organizations found their performance management process to be “some – what effective” or “not at all effective”. [Source: DDI’s insights from Brandon Hall’s Performance Management report] In these organizations, employees as well as employers both found performance management systems to be difficult and ineffective.
For the “some-what effective” & “not at all effective” workplaces, CFOs estimate that ineffective performance management processes result into thirty percent loss of company’s performance potential. Only 8% of organizations drive high value from enabling effective performance management practices. Infact, having effective performance management practices is an absolute pre-requisite for any aspiring or ‘to-be’ high performance organization.
Know Your Organization’s Performance Management Capability Maturity here: Link
To add to the woes, It has been found that 30% of performance reviews end up in decreased employee performance and 2/3rd of performance management systems misidentify high performers.
Being said that, the performance management practices have been going through a transformation since some time – Until recently we operated with the limited imagination of ‘Bell Curve’ phenomena, where even the world’s biggest and most successful businesses – relied on annual appraisals and forced rankings of their workers’ performance, with the lowest-ranked staff routinely dismissed. This approach ended up fostering, a sense of internal competition – a zero sum game that made collaboration and team-working difficult, counter productive by its design, it ended up incentivizing ‘High Performance at any costs culture’.
Infact, many organizations realized that it was a waste of valuable time (Deloitte calculated it was spending 2 million hours a year on performance management), and that Managers and employees hated it (a 2015 Willis Towers Watson survey found that 45% of managers didn’t value their company’s performance management system), nor was this relevant, given the dynamism, velocity of VUCA setups, where organizations were found struggling to build their capabilities for future, were missing out on forward-looking conversations & its deployment.
Performance management is like budgeting: It’s required in every organization, it’s cumbersome and onerous, it never comes out exactly as you planned, and managers always whine, but you would never get rid of budget planning just like you should never get rid of performance appraisal – because no matter how flawed the process is, it’s good business practice.
What constitutes effective performance management practices ??
From our learnings, the performance management practice should typically go beyond formal ratings, & compensation determining exercise to focus on 4 key objectives (& most of the organizations, around 82 – 90% of all, don’t look beyond 1st & 2nd objectives):
- Enable employees to grow & develop their competence, capabilities & potential
- Ascertain effectiveness of communication & alignment of Organizational Goals, Objectives to teams & individual goals
- Help understand employees & teams best practices to perform at their highest potentials
- Gives a snapshot & health check of existing Organizational Competence, Capabilities, Change Management readiness & Execution effectiveness
Know Your Organization’s Performance Management Capability Maturity here: Link
The Brew’s nudge to design/redesign effective performance management practices
At The Brew, we strive to enable organizations with the above insights, in addition to following key features, arising out of Performance Management Practices:
- Create a more clear delineation between satisfactory performance and truly outstanding performance
- Defining performance measures for every position that are directly connected to the organizational goals and values, creating management reviews that are directly linked to the organizational strategic goals
- Create a performance feedback culture where the role of the manager is that of a coach or counselor providing feedback that guides employee development rather than critical judges of past task outcomes and behaviors – which can be accomplished by allowing the review to evolve out of the employee’s own self-evaluation
The Brew’s Performance Management Practices includes:
- A complete diagnostic review of existing mechanism & measurements
- Effectiveness & Benchmarking KPI, which could include: Surveys, Focus Groups
- Independent testing of metrics & KPI’s against strategic objectives
- Support for organization to cascade & deploy the Performance Management Process
- Support in implementing the process
- Support for augmenting process to practice – with continuous embedment to culture, business & organizational ethos
Know Your Organization’s Performance Management Capability Maturity here: Link
Connect with The Brew to get started on designing/redesigning the Performance Management practice for your organization, developing a calibrated yardstick to overall purpose & competitive advantage.