Performance Management: Don’t throw out the baby with the bathwater!

In a controversial new article in the Harvard Business Review, Marcus Buckingham and Ashley Goodall recount their experiences in reshaping Deloitte’s performance management system. The article calls for a radical new approach for evaluating employees aimed at improving the effectiveness of performance management.

While Buckingham is brilliant and Deloitte is best-in-class, “there is danger in them there hills” (as the saying goes). Some will read the headlines of no performance reviews and rationalize it as an excuse to reduce the rigor of their performance management process. But taking shortcuts would miss the point entirely.

A more careful study of Buckingham’s conclusions call for feedback after every project and other real time feedback loops that provide more timely and meaningful assessments of employee performance. He advocates for weekly meetings (which are remarkably similar to what people in my travels refer to as “one to ones”).

So the next time I hear a CEO say that HBR says we don’t have to do performance reviews, I am going to ask what system they have implemented instead (right after I vomit). I lack excitement about reviews as much as the next guy, but that doesn’t mean that we can all get willy-nilly and throw the baby out with the bathwater.

The problem with performance management may not lie with frequency, or formality, but with the inherit problems with grading human beings. Companies are finding descriptors such as “meets expectations” may actually be demotivating. Thus the trend is shifting from a rating system to a feedback loop where employees better understand exactly how they deliver value in the workplace.

The spirit of such methodologies is to create a more nimble system that is in alignment with the way companies work today. Highlights of the Deloitte method include:

  • Creating “snapshots of performance” after projects are completed
  • Making sure that raters have consistent standards by which people are rated
  • Ensuring that raters are the people who have the most applicable experience with the evaluated employee
  • Ensuring variable compensation is motivating and based on the actual contributions of the employees
  • Testing your system to make sure that it impacts performance

So be thoughtful about how you manage performance and make sure that you have a system that meets the needs of your employees, and actually promotes improved performance.