Employees are the most critical asset of any organisation. They play an important role in ensuring its long term success. Thus, it makes sense that companies take extra efforts to streamline their performance management process. Companies with successful performance management process are able to engage employees and ensure that they are extracting the best out of the existing potential. All these efforts culminate in improving the bottom line of the company.
Although the world of work is changing rapidly, some companies still rely on traditional methods of managing performance. These methods may have worked in the past but it is time to reassess their existence. Due to the complications and time consuming nature of spreadsheets and documents, many companies are increasingly turning towards better alternatives for performance management.
Over the past couple of years, a few have sought to find better ways of managing performance in the workplace. Here we have identified 5 companies who have completely changed the way employee performance is managed. One thing that is common across all these companies is that they realize the importance of frequency of assessments.
5 companies with the key to successful performance management
Any list that talks about successful performance management cannot be complete without Google. In fact it stands at the top of this list, being our favorite. Google abolished their numerical performance rating system in 2014 and replaced it with a peer review system, that leverages OKRs or Objectives and Key Results goal setting framework.
Here, reviews are carried out quarterly or semi-annually. Reviewers are asked to note one thing the employee being reviewed should do more of and one thing that should be done in a different way.
Managers then determine where to grade an employee on a five-point scale where five is “superb” through to one “needs improvement” based on the peer reviews. This style of collaborative approach helps to prevent feedback bias to a great extent. The assessments are shared with a set of examples to justify the evaluation, be it positive or negative.
Deloitte previously relied on annual 360-degree feedback that resulted in them wasting 2 million hours per year (Source). They found that there was a significant drop in employee engagement as well as performance levels. They wanted to introduce a much more nimble, real-time and individualized process that could focus on developing performance rather than simply evaluating it.
Couple of highlights about the new performance reviews
- The optimal frequency should be weekly
- Carry out regular check-ins about near-time work initiated by team members.
The thought behind this new process is that people tend to be interested in their own insights, achievements and contribution. Successful performance management processes are those where companies can help the individuals become more engaged in their own performance.
Adobe also believes that regular feedback and check-ins are lot more important than ever before. They have already scrapped their performance review systems. After introducing a frequent check-in program, the company was able to bring about a 30% reduction in voluntary employee turnover.
Another change brought about by this method is that involuntary departures have risen by 50%. The reason being, the increase in ‘tough discussions’ between managers and employees who are particularly struggling with performance issues. Instead of waiting around for the next performance review cycle, these discussions can take place during one of the frequent review sessions.
It’s best to identify issues before they turn into large problems.
Netflix has also moved away from annual reviews to a more frequent feedback process. Their philosophy is simple. By talking simply and honestly about employee performance on a regular basis, you are bound to get good results eventually. All you have to do is point the employees in the right direction whenever they go astray.
They concentrate on building a culture of high frequency feedback, one of the key elements of Agile Performance Management. It has definitely helped them reap great benefits in recent years.
Accenture got rid of their ratings system a couple of years ago and replaced it with a more flexible system, in which employees receive timely feedback from their managers on an ongoing basis once their work begins.
It is a conscious move by the top level to move away from micromanagement and let employees focus on doing what they do best. After all, it takes a considerable amount of effort to get the right people for the right roles. If this condition has been satisfied, then it doesn’t make sense to have a rigorous performance management system. They will eventually get the results that are expected out of them.
There are a number of other companies (and startups as well) who are coming up with new approach for managing performance.. With time, they too might find popularity once they are able to transform their work culture.
As 2017 comes to a close, it is time to look forward for newer performance management trends that could help you succeed in 2018. Here are 3 things that have the ability to ensure successful performance management globally:
- A culture of continuous feedback and performance management
- Investing in robust performance management systems
- Chat-bots to ease the process