More and more is written about the need to overhaul performance management: the process companies use to determine who gets more money, who gets promoted, and who is let go. A colleague of mine at one of the top companies recently said they were looking at throwing out most established and mature talent management practices.
Why? Employees don’t like the current process. 20% of companies calibrate their ratings (“forced distributions”), which mandate a limited number of employees who can be rated at the top. Annual feedback is not as good as regular coaching with constructive feedback–a significant manager deficiency. Annual goals are usually out-of-date. Companies that set performance goals quarterly generate 31% greater returns from their performance process than those who do it annually. One’s development and career path discussions take a back seat to evaluation and bonus decisions.
What will replace this? Possibly, it will be a social performance and rewards system, which will leverage the organization’s collective wisdom and individual feedback instead of one manager’s viewpoint. This is especially attractive today, when many matrix work teams have displaced the command & control manager. The goal is to continuously improve employee engagement, retention, and performance.
Is your performance management system effective?
