Performance is changing rapidly. In 2015, more big name organizations scrapped traditional performance appraisals and restructured how their performance management processes. In 2016, it’s expected that significant changes will continue to occur.
Amongst the performance management trailblazers were Microsoft, Adobe, Cigna and Accenture. These organizations dropped formal rankings and introduced on-going feedback facilities and informal check-in meetings.
All four of the companies reported positive outcomes, leading the way for other companies to embrace change.
After calculating that performance management was consuming two million hours each year across their organization, Deloitte joined the ranks of changemakers. More unexpectedly, 2015 also saw General Electric finally put their infamous “rank and yank” system to bed.
But performance management is by no means a solved issue.
While an increasing number of companies are recognizing the need for changes in their approach to performance management, just this month Yahoo were caught red-handed using their performance management as way of justifying firing groups of employees.
How Performance Management is Changing
Let’s take a look at how performance management evolved in 2015.
Dropping Performance Ratings
Adobe abandoned their performance reviews in 2012, Deloitte scrapped them early in 2015 and Accenture discontinued their use of rankings in September 2015.
Taking into account the fact that 90 percent of HR professionals don’t believe performance ratings are effective, it’s no surprise that this is happening.
Performance ratings have been confirmed as leading to lower levels of motivation and are proven to negatively impact performance as a result. Instead, forward-thinking companies are favoring well-structured objectives and regular feedback for employees over outdated grading systems.
Employees lose sleep over them, managers plough their precious time into hefty piles of paperwork, and HR are left with a mountain of data to analyze. It’s the annual performance meeting. Now, companies are recognizing that once-a-year meetings are inefficient and insufficient.
Instead, companies are introducing “check-ins”, regular, informal meetings or conversations between managers and individual employees. These check-ins allow managers to identify issues early on, support employees over time and encourage progress.
Traditionally feedback has been stored up and kept on file all year, waiting until the annual performance review when managers let it loose all at once.
Not only is this uncomfortable for managers and demoralizing for employees, but it digs up old ground that often neither the manager nor the employee can fully recall.
Instead of saving feedback up, managers and co-workers are being encouraged to provide in-the-moment feedback as soon as an event occurs, whether it’s positive or negative in nature. This way employees are praised when appropriate and coached when a challenge presents itself.
In line with the abandonment of performance ratings, companies are setting more regular objectives with shorter time frames. Yearly goals and meetings are rapidly being replaced with more regular, informal check-ins and shorter-term objectives.
Performance is being constantly monitored, as opposed to analysed just once a year. At U.S. company Cargill, the switch to ongoing performance discussions has resulted in 70 percent of employees saying they feel more valued.
What Does Performance Management Look Like in 2016?
Moving into 2016, analysts are predicting that as many as half of the Fortune 500 companies will abolish their annual performance review rankings either this year or next.
These companies will be building on the concepts introduced in 2015 and well as embracing new performance management trends in 2016.
Online Performance Management Software and Apps
Paul Hamerman, Vice President and a principal analyst at Forrester Research, has predicted that a shift to the cloud and increased use of software will be a big part of the future of performance management.
It’s thought that cloud-based HR could improve employee engagement as well as cut down on admin time for HR teams.
Many companies are already introducing performance management software that uses the cloud. General Electric is currently using a performance feedback app for managers and employees so that they can request feedback and provide comments from their devices.
Increasing Impact of Social Media
We’re already seeing social media taking on a role in the recruiting sector and it looks like it will also impact performance management.
In the future, social media interfaces will be part of the software design to make it as user-friendly as possible. Software will be designed to function in real-time to allow for constant feedback and regular updates between managers and co-workers.
More Scrutiny on Gender Bias in Performance Management
The beginning of 2016 saw some performance management analysts picking up on the existence of gender-related bias in outdated performance management processes.
According to findings from Kieran Synder, 58.9 percent of performance reviews received by men in the tech sector contain critical feedback compared to a whopping 87.9 percent of the reviews received by women.
As a result, we can expect an increasing emphasis on ensuring performance reviews in the future are free from bias.
One of the ways this may be tackled is through providing training for managers on best practices when they are writing their performance reviews and ensuring they are always taking a forward-looking approach.