Posted by Kathi Enderes on September 24, 2018.
Performance reviews are dead! Long live performance reviews!
This sums up the last few years’ heated discussion around reviews, ratings, and performance management (PM). I was excited by the opportunity to lead a broad industry study regarding performance management as my first priority with Bersin. I have been working on this topic for the last 20 years: in management consulting for Fortune 50 companies, as a practitioner in large organizations, and most recently in my research here at Bersin.
Over the years, companies have attempted to optimize performance management over and over. Organizations have changed rating models and distribution curves, pay structures and calibration sessions. Some tried to increase the frequency of ratings, and others tried to eliminate them altogether. Leaders have been asked to own performance management while still tracking completion rates.
Despite all these efforts, many leaders and individuals are still confused and frustrated, and organizations don’t see the consistent results needed. So, we know it doesn’t work. What’s next? Clearly, people should stop fiddling with quick fixes and trendy repairs and start thinking about performance management in a fundamentally different way—enabling performance in the work itself.
Bersin’s Latest Research on Managing Performance
Bersin’s High-Impact Performance Management1 study reveals the fundamental, dramatic change needed. That change is not getting rid of ratings or reviews or increasing the frequency of a broken process.
It is a different mindset and culture.
Let’s start with the why of PM. Performance management exists for two philosophical reasons: competitive differentiation (comparing individuals to peers so they can be rewarded and promoted accordingly) and coaching and development (providing insights on past performance to enable future growth and progress).2 Rather than focusing backward, mature organizations encourage development through forward-facing performance activities aligned with increased workforce demands for career and growth opportunities.
Once organizations establish this purpose, the question about pay-for-performance approaches might come up—are those systems still relevant? It was never an either-or proposition between growth mindset and pay for performance. Fair, fact-based, unbiased rewards for results are as important as ever—but they are no longer the ultimate purpose of performance activities.
Our research examines individual, team, and leader responsibilities and highlights what role HR can play in PM. While a bottom-up, work-enabling approach puts individuals and teams squarely in the center of performance, leaders play a significant role, too—a role new to many organizations.
Technology is a key enabler of this change. Current technological capabilities allow rich, real-time insights on performance and development and integration of performance and development activities into the work. It’s not a silver bullet, though—organizations need to examine the use of technology strategically and focus on those capabilities that best enable their unique performance approach.
Organizations should stop treating performance management as a separate process. By weaving the threads of PM into the daily tapestry of work, performance and development activities eventually become part of the culture of the organization. In this way, Bersin’s research takes a deep, analytical look at PM, examining what companies need to do and the issues that need to be considered along the way.
Our latest research also takes a close look at the ways in which high-performing organizations are already taking action. These companies are disrupting PM by changing how they think about managing performance and what that means for individuals, teams, leaders, and the use of technology.
The most effective organizations demonstrate that a fundamental mindset shift is the only path forward for effective performance management. Focusing on development and growth that is embedded in the flow of work can produce key business outcomes. While high-performing organizations manage change, innovation, and risk-taking better than low-performing organizations, there is still much more to be done.
In the coming weeks, we’ll be launching our research findings and latest maturity model for Bersin members. In the coming months, we’ll be offering more in-depth insights and analyses on PM and what you need to know to effectively position your organization for the future of work. For more information, visit Bersin.com.
1 Seven Top Findings for Moving from Managing Performance to Enabling Performance in the Flow of Work, Bersin, Deloitte Consulting LLP / Kathi Enderes, PhD, and Matt Deruntz, 2018.
2 High-Impact Performance Management: Part 1: Designing a Strategy for Effectiveness, Bersin & Associates / Stacia Sherman Garr, 2011.