Transforming performance management? Watch out for these 3 common pitfalls

Part 1 of a 3-part series

Posted by Joan Goodwin, Diane Morris, Greg Scott and Josh Davis on September 10, 2019.

Let’s start with the bad news: Performance management is the No. 1 “love to hate” talent program. According to a recent study of over 1000 organizations by Bersin™, Deloitte Consulting LLP, performance management has a -60 Net Promoter Score. That’s a lot of dislike across the globe. The good news is that there’s (almost) nowhere to go but up, and organizations have a lot to gain by transforming their approach to performance management.

When it’s done well, a continuous performance management approach motivates employees to not only accomplish their goals, but also to develop better relationships with their managers, grow and develop within the company, and excel at work that is most meaningful to them. In short, it can support a more human experience, which 84 percent of respondents in the 2019 Deloitte Global Human Capital Trends report identified as an issue important to their organization. And meaningful performance management is related to better business outcomes: High-impact organizations are 1.4 times more likely to meet their financial targets and 2.4 times more likely to innovate than low-impact organizations.1

We work with many leaders who are interested in reinventing their organization’s performance management design and process. Unfortunately, there’s no easy answer or quick fix. In fact, Bersin’s performance management research tells us that simply eliminating ratings isn’t an effective solution (no matter how many organizations make the news for doing so).

This series will unpack the complexities of performance management transformations. The stakes are high and it’s important to be strategic in your redesign choices. Transformations that fall flat can create—or deepen—employee dissatisfaction, negatively impact your recruitment efforts, and create change fatigue. Successful transformations, however, can build the organizational agility required by the new norms and realities of work, supporting stronger organizational performance.

Today’s post highlights some potential pitfalls when transforming performance management in organizations today, based on what we’ve learned through experience and research.

1. Pitfall: Playing it safe

Some organizations get trapped in old ways of doing things: The old ways are familiar, and making big changes requires more effort, time, and resources.

Organizations that transform performance management by sticking to the status quo may risk ending up with more HR processes, protocols, and requirements than ever. Playing it safe may feel like the right thing to do, but there may be unintended consequences, like wasting time and energy by making incremental improvements to a process that’s fundamentally flawed.

Instead: Understand that redesigning performance management can and should be a time for innovation and novel approaches. Think big and bold—broaden the aperture first, investigate the “art of the possible,” and challenge old ways of doing things. Don’t limit yourselves to what seems like an easy fix simply because it requires the least amount of change or seems the most familiar and simple. Transforming performance management is an opportunity to consider the changing nature of work and challenge your organization to meet these new realities. Give up a little control: Trust and empower managers and employees to do what is most relevant and meaningful for them, and allow the business to drive your performance management requirements.

2. Pitfall: Jumping on the bandwagon

Work is changing, and many organizations are changing their performance management approaches in response. But be mindful— avoid focusing too much on what’s making headlines. While it’s important to keep an open mind and learn from others, avoid the temptation to simply go along with what everyone else is doing.

Implementing something simply because it’s popular externally can create a disjointed message about performance management and employee experience internally, one that doesn’t align with your organizational strategy and values.

Instead: Take this opportunity to make performance management a meaningful experience for employees. Conduct employee sensing internally and find out: What motivates your employees? What data do your leaders need? What rewards are you willing and able to offer? What’s special about your culture? Build your own performance management philosophies and guiding principles, engaging the input of the business and HR leaders, managers, and employees at all levels in the organization.

3. Pitfall: Betting big on technology

The vendor landscape for performance management is expanding rapidly, and many solutions offer exceptional user experiences coupled with powerful data capability. Many organizations are finding that it’s the right time to find a new performance management solution, but should realize that technology isn’t a silver bullet.

Technology cannot drive culture and behavior change, which is a critical piece of most performance management transformations. So, technology alone may not deliver on what you set out to do.

Instead: Recognize that technology should be an enabler, not a driver, of your performance management transformation. Carefully craft the performance management design you want first and select a technology that can be configured accordingly. Then, carefully manage the change across your organization, communicating the why behind the shift and helping employees and managers navigate the new system, adopt new mindsets, and build new capabilities.

First things first

While it’s not easy to transform entrenched performance management processes, it’s worth the effort. Taking the time to deliberately think through the purpose, outcomes, and data you need to make talent decisions and drive a great employee experience will help you begin your performance management transformation on the right foot. We’ll explore that in Part 2 of the series—stay with us!

Joan Goodwin is the performance management practice leader in the Human Capital practice of Deloitte Consulting LLP, focused on talent management, performance and development, culture change, leadership development, and change management.

Diane Morris is a consultant in the Human Capital practice of Deloitte Consulting LLP, focused on performance and development, employee experience, and talent strategy.

Greg Scott is the deputy performance management practice leader in the Human Capital practice of Deloitte Consulting LLP, focused on performance and development, HR service delivery, training, and change management.

Josh Davis is a senior consultant in Deloitte’s Workforce Transformation practice, focused on talent strategy and program design that helps organizations create meaningful employee experiences built upon deeply integrated processes, incentives, and systems.

1Seven 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.
2Ibid.

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