“Imagine, for a company of 330,000 people, changing the performance management process – it’s huge,” Pierre Nanterme, CEO of Accenture, told the Washington Post. “We’re going to get rid of probably 90% of what we did in the past.”
The company is ditching its performance appraisals as they failed to achieve their primary purpose: to promote better staff performance. Instead, the firm will switch to a more fluid system in which employees receive regular feedback from their superiors.
Accenture sees annual appraisals as an excessive use of time, money and effort; the organisation wants to evaluate employees based on their individual roles and performance.
“All this terminology of rankings – forcing rankings along some distribution curve or whatever – we’re done with that,” Nanterme said.
“We’re going to evaluate you in your role, not vis-à-vis someone else who might work in Washington, who might work in Bangalore. It’s irrelevant. It should be about you.”
A change is overdue
Clearly it’s time for a change. But a change to what? “Performance management methodologies, processes and their supporting tools definitely need modernising,” says Nick Southcombe, general manager of Frontier Software. “They need to be less about just going through the process and shift to being more humanistic. It’s good to see some leading organisations recently announce major changes to their approach to performance management, including in some cases completely eliminating them.”
Southcombe concedes, however, that there is still a place for performance management. Employees require clear objectives and most do appreciate honest and regular feedback on how they are tracking towards those objectives. The key is to take the angst out of this by making it less process oriented and more communication based, Southcombe suggests. To do this requires appropriate methodology and appropriately trained managers.
“Too often managers have not been trained in how to prepare for and have the performance discussion,” Southcombe says.
“It is also essential that employees are fully briefed about their part in performance management.”
In some cases performance is selfevident. For example, you either achieve your sales target, your billable hours target, or you don’t. In these situations ratings add no real value. However, given employees do appreciate honest feedback on their performance, Southcombe suggests it’s difficult to see a manager not using some form of rating for most employees.
“How else will employees know? Ambiguity is not helpful and ambiguity could lead to issues in the future,” he says.
Are there any viable alternatives to ratings based performance appraisals? While self-assessment by employees might be one option, Southcombe suggests that, in fact, manager performance ratings might be less prescriptive than many of the oververbose ratings systems used in businesses today.
For example, the only two possible ratings could be ‘on track’ and ‘not on track’.
“It’s hard to see that management won’t rate employees behind the scenes or with shadow systems, or even just in their heads – which is not healthy,” he says. “Management does tend to want to identify the ‘keepers’, the rising stars, and those who need development. If this is reality, then it’s best supported by an honest, modern and well-understood performance management methodology.”
Regular, continuous, transparent. These are the words thrown around by workers – especially younger workers – in relation to performance management.
“Certainly younger workers are used to a world of regular, rich communication,” says Southcombe. “This is actually conducive to good performance management practices. Performance reviews shouldn’t be single events scheduled just once or twice a year. Managers should engage in frequent performance-related conversations with staff. This way performance concerns can be addressed as they happen and, if not more importantly, praise can be delivered in real time whilst it is still current.”
Has the technology that might facilitate this real-time, continuous feedback kept pace? What do performance tools look like in 2015 and beyond?
“Performance management software tools will be enhanced to become more social media-like to support this type of communication and frequency,” Southcombe says. “A regular conversation, be it monthly or even weekly, can be recorded in the system along with any relevant notes from both the manager and worker – much like posting to Twitter or Facebook.”
It’s also not a big leap for performance management software tools to enable 360-degree appraisals; in fact, many already do. A true 360 includes feedback from not just managers, staff and peers, but also from people outside the organisation.
“Software tools, particularly those that have the familiarity of social media and are hosted in the cloud, will make this much easier,” Southcombe says.
A major failure of performance processes is their isolation from just about every other system and process in the organisation. There is very easy to share identified actions arising from reviews with other modules. By directly feeding into integrated modules such as L&D, succession planning and remuneration planning, an organisation is better positioned to ensure the identified actions are assessed and implemented.
“It’s this sort of follow-up that gives value to the business of performance management,” Southcombe says.
Overlay this data captured in an integrated HRIS with a good reporting tool, and a whole new world of analytics becomes available to the HR strategist and management.
In addition, it is much easier with a performance management software system that has a strong reporting function to ensure management and staff are conducting performance reviews according to organisational policies and timeframes. This should provide an incentive for more honest performance management relationships between managers and their staff, and thus a more effective workforce.
That alone should score a 10/10.
About the author
Frontier Software was founded in Melbourne in 1983 and is a global leader in payroll, HR and talent management solutions.
In September, multinational management consulting firm Accenture will join a growing club of organisations that have ditched performance reviews and reimagined how performance is managed.