the evolution of performance management
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THE EVOLUTION OF PERFORMANCE MANAGEMENT September 22, 2016
MELANIE SCHREMS ROB SCHMITTER
Melanie SchremsStrategist and Consultant, Globoforce
Rob SchmitterSolu;ons Architect, Globoforce
AGENDA • History of performance management
• Current state of the annual performance review
• New research and cutting-edge practices
• Rise of teams, crowdsourced feedback and its impact on performance management
What is your company’s practice today for annual performance reviews? o We have a traditional approach and have no plans to
change o We are currently exploring alternative methods o We don’t do annual reviews, rather more frequent
check-ins, but still use performance ratings o We don’t do annual reviews, rather more frequent
check-ins, and have abandoned performance ratings
POLL QUESTION 1
A BRIEF HISTORY
ANNUAL PERFORMANCE REVIEW – THEN
1950 Performance Rating Act Purpose was to ensure that performance ratings were used to recognize merit and contributions to efficient operation; to strengthen supervisor-subordinate relationships; and to improve individual effectiveness.
1954 Incentive Rewards Act Authorized honorary recognition and cash payments for superior accomplishment, suggestions, inventions, special acts or services, or other personal efforts
ANNUAL PERFORMANCE REVIEW –NOW
95% 70% of managers dissatisfied with the performance management process
DO NOT believe their company’s PM system improved performance
90% HR heads believe PM process does not yield accurate information
RECKLESS WASTE OF TIME & MONEY
200 # of hours the average
manager spends on performance review
activities
25 business days
3M average spend on
reviews for a 10,000-employee company
PSYCHOLOGICAL IMPACT
Fight or flight mode • 50% surprised at their rating • Of those, 90% are unhappy
because they expected a higher rating – their engagement drops by 23%
Fixed mindset vs. growth mindset
AND THE ‘SHORTFALL’ LIST GOES ON
• Not developmental • Not aligned with the changing
workforce demographic preferences
• Considers limited perspectives • Subject to social cognition biases • Failure to evolve with shifting
business priorities
CUTTING EDGE PRACTICES
CUTTING EDGE PM PRACTICES
• Frequent check-ins and a brief annual summary
• Employees use a mobile app, PD@GE, to give one another feedback at any time
• Pilot groups are trying reviews without ratings
• Emphasis on coaching throughout with a positive tone – growth mindset
CUTTING EDGE PM PRACTICES
• A shift from annual forced ranking to more frequent, informal conversations between managers and colleagues
• Fewer valued staff leaving and increase in “involuntary, non-regrettable attrition”
• Retaining the right people
CUTTING EDGE PM PRACTICES
• No longer reliant on annual review
• Employees receive regular feedback from managers on progress
• Goals adjusted throughout the year
• Encourage greater speed, creativity and teamwork
RATINGLESS APPRAISALS
ONGOING FEEDBACK
CROWDSOURCED FEEDBACK
CUTTING EDGE PRACTICES
RESEARCH SHOWS…
• 97% or organiza;ons use ongoing feedback • 50% of organiza;ons surveyed use ra;ngless appraisal
• 25% use crowdsourced feedback
The most effec6ve combina6on of prac6ces was the use of all three cuAng-‐edge prac6ces or the use of ongoing feedback plus crowd-‐sourced feedback
What cutting-edge performance management practices is your company using today? o Ongoing feedback only o Ratingless reviews only o Crowd-sourced feedback only o All three or a combination of these practices o None of these practices
POLL QUESTION 2
WHY NOW: ONGOING FEEDBACK
• Helps build posi;ve rela;onships between managers and colleagues
• Helps to solve problems in real ;me
• Fits the fast-‐paced strategy of many businesses
• Increases focus on development • Leads to more valid performance
reviews and beLer pay for performance
• Helps create a posi;ve feedback culture
WHY NOW: RATINGLESS REVIEW
• Ra;ngs demo;vate -‐ Fight or flight response
• Saves ;me • Allows managers and
employees to directly address performance versus ra;ngs
• Leaves more room for discussion around employee development
• Encourages collabora;on versus compe;;on
WHY NOW: CROWDSOURCED FEEDBACK
• More natural, specific, ;mely and useful
• Fits team-‐based, modern org designs
• Helps to create a posi;ve feedback culture
• Managers can leverage feedback captured for a robust view of performance
RISE OF TEAMS
Since performance exists only in teams, we must build all of our tools around iden;fying which teams currently exist and who is on them. If we don’t, we run the risk of con;nuing to do performance management in a parallel
world to one where performance actually occurs.
“
”
-‐ MARCUS BUCKINGHAM
HOW SOCIAL RECOGNITION SUPPORTS THIS EVOLUTION
CROWDSOURCED FEEDBACK AND PERFORMANCE MANAGEMENT
Source: SHRM/Globoforce Employee Recognition Survey 2013 Report
Would crowdsourced recognition be helpful data to incorporate into
performance reviews?
Which would provide a more accurate picture of employee performance?
Yes, 78%
No, 22% Feedb
ack from
supervi
Feedback from
manag
PRAISE + PRIZE = POWERFUL MOTIVATOR
Source: SHRM/Globoforce Employee Recognition Survey 2013 Report
6%
94%
0%
20%
40%
60%
80%
100%
Negative Feedback Positive Feedback
What has a greater impact on performance – negative or positive feedback?
83%
17% 0%
20%
40%
60%
80%
100%
Recognition with reward
Recognition without reward
Are employees more motivated by recognition with or without a reward?
RECOGNITION BOOSTS PRODUCTIVITY
increase in engagement from recognizing
employee performance
60%
higher productivity from engaged companies
63%
of best in class organizations state that employee recognition is
extremely valuable in driving performance
60%
KEY TAKEAWAYS
The evolution continues with… • A focus on human-to-human
interactions • Frequent conversations that
accommodate shifting business priorities
• An approach better aligned with motivation science
• HR providing structure and guidance
Critical success factors: • Managers need to see value in
ongoing effort
• Managers need to act as coaches (may require training)
• Success of crowdsourced feedback dependent on employees understanding how to effectively give feedback
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