HR News & Trends, Weekly Wrap

Sticking With Performance Management, Even If It Doesn’t Work

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Anyone who manages people and has been awake and alert for the past couple of years knows this to be true — no one seems to like performance reviews or performance management.

Even people who say they do it well also admit in the same breath that they struggle with it, and for most managers and executives, they would probably just like to see it go away altogether.

Yes, most everyone really hates performance management. And new research from i4cp gives a better sense why.

Only 28% say they’re doing performance management well

Here are the highlights of their research:

  • Nearly nine out of 10 companies (86 percent) have some form of a performance management process.
  • In spite of the fact that most companies have a system, only 28 percent think they are doing performance management well.
  • Only 55 percent of high performing organizations feel that performance management has a positive business impact on their organizations, and this number drops to 36 percent among lower-performing organizations.
  • Only 29 percent of survey respondents say that their employees believe their performance management system to be fair.

These are poor numbers no matter how you slice them, although i4cp believes that they aren’t as negative as some (like me) may view them. As Cliff Stevenson says in a i4cp Trend Watcher blog post that analyzes the survey:

These trends should not be taken as negative indicators. The interest level in performance management is very high among C-level executives, and with the advent of Millennials joining the workforce and continuing globalization, finding ways to monitor and improve and develop performance is a useful and highly sought-after capability. Although changes to PM have been incremental, they have also been thoughtful and forward-looking, and the people who are involved in this field can rest assured that things are getting better. Slowly.”

Still directly linked to compensation

Cliff Stevenson has spent a lot more time with the survey findings than I have, so I have to take his word for it when he says this isn’t as big a knock on performance management as it seems. But, he also says this:

Despite a relatively short history, performance management has become so synonymous with compensation that separating the two is anathema to most established organizations. With only a few case studies of companies that have gone ratingless (four are available to i4cp members), most organizations are waiting until the bandwagon is firmly established before jumping aboard.

The good news for those organizations that are thinking of moving to a performance management system without ratings — those organizations that have done so such as Expedia, REI, Adobe, and Juniper Networks — have done so successfully. In fact, all four of those organizations have seen increases in either bottom line revenue or employee engagement, or sometimes both.

The bad news is that performance management is still directly linked to compensation at most companies. Of the surveyed respondents, 73 percent said their organizations’ primary use of PM is to support compensation decisions — virtually unchanged from 2006, when 72 percent responded with the same answer. As long as compensation management and performance management remain linked, it is very unlikely that we will see fundamental changes in the core concepts of performance management.”

I get that performance management suffers from being too closely tied to compensation, but the bigger issue is that the PM process is clunky and difficult in far too many organizations.

There has to be a better way

Despite all the wonderful performance management software and systems I see at HR Tech — and just about every tech company has one — not enough organizations have invested in them. I keep hearing that only 20 percent of organizations have bought such a system (and I would love if anyone has better numbers on that) but it makes me wonder: why don’t more organizations invest in modern performance management software that would make handling reviews and feedback a whole lot better and easier?

As a veteran manager who struggled mightily with paper forms and the once-a-year hell that the performance review process is known for, I keep telling myself — there has to be a better way. 

And there is. Performance management systems are slick, easy to use, and can help managers give, and employees get, continuous, real-time feedback on how they are doing and what they need to do to improve.

I know these system are out there. I’ve seen them.

But just as American business isn’t investing much in hiring or their workforce, they also aren’t spending the money to improve how they handle performance management.

That’s why the cycle continues, with everyone hating performance management and believing they don’t do it well despite making it a key part of how they evaluate their talent.

This is what I get from the i4cp research, and it frankly, it gets old. The tools exist to make performance management a lot more effective — we just need to spend invest in them.

500 low performers are out at Yahoo

Of course, there’s more than the latest on performance management the news this week. Here are some HR and workplace-related items you may have missed. This is TLNT’s weekly round-up of news, trends, and insights from the world of talent management. I do it so you don’t have to.

  • Is this the most powerful person in the office? The Wall Street Journal seems to think so, and they think it is the executive assistant to the president or CEO of the organization. See if you agree with this: “The schedulers, gatekeepers and caretakers of the corporate world are rarely seen, but they have a profound effect on the daily lives of the executives they serve. They do everything from booking business trips, ordering anniversary gifts and arranging pet care to attending high-level meetings and deciding who can and can’t meet with their boss. The work can be thankless and often comes at a cost to their own personal lives, but these workers wield subtle influence at a company’s highest levels — and no small amount of power.”
  • Goodbye to the Yahoo 500. Yahoo CEO Marissa Meyer is at it again. The woman who took a hammer to the organization’s flexible work policy has now begun terminating 500 “underperforming” employees. According to Kara Swisher at All Things Digital,  the performance review system  Meyer has been mimicking “is similar to an employee-evaluation method used at Google — where Mayer spent her entire career before becoming Yahoo’s latest leader — using an elaborate series of data points to judge how individual employees are doing. …  (It is) a different way of culling underperformers for Yahoo, which had used a variety of HR methods over the years, including stack-ranking of staffers. (There is a stack-ranking in this mix, a sometimes controversial HR technique, but it is more complex than that.)”
  • Was Condé Nast right to kill its internship program? I wrote about this happening here last week, but now, there is some pushback to the news that publishing giant Conde Nast is killing its longtime (and popular) internship program. Angela Washeck, writing on Media Bistro, says of the decision, “There’s so much more to doing internships than just the desk work. As they’re pursued in such a transitional time of life, I believe they help to shape who you are not just professionally but also personally, and if they’re done right, they can push you toward a decision about what you want to do with your life. For the rest of your life. … Now, freshly graduated people are potentially left to knock on Condé Nast’s door with zero relationships in the building, having had no opportunity to show them that they can hack it at a major media title — the shot you get during an internship.”
John Hollon is Vice President for Editorial of TLNT.com, and the former Editor of Workforce Management magazine and workforce.com. An award-winning journalist, John has written extensively about HR, talent management, leadership, and smart business practices. Contact him at john@tlnt.com, and follow him on Twitter at http://twitter.com/johnhollon.
  • r/ally

    In terms of performance reviews, would it not be best to look at the systems as a form of evolution. While current systems may not be perfect, you need to put them out in the wild and iterate as you learn.

    Another part of the issue is that when companies deploy software, they have the expectation of zero learning curve. Everything works perfectly, right out of the box==> we all know this isnt the case, yet we keep expecting it to be so

  • steventhunt

    John, nice article. This research aligns with much of what SuccessFactors is seeing as well. We have several customers that intentionally lessened (but not removed) the link between performance assessments and compensation decisions, as well as many that have eliminated the use of numeric ratings in favor of more meaningful descriptive performance categories. These companies focus the initial performance
    assessment on having employees and managers agree on a qualitative description
    of the employee’s accomplishments with an emphasis on coaching, but do not
    assign an overall performance category until much later in the process during performance calibration.

    One important point to keep in mind – all companies rate employees in the
    sense that they place employees in categories where some are considered to have
    more potential or contribute more to the organization than others. If
    your company pays some people more than others or promotes based on past
    record of accomplishment, you are rating employees. A merit pay increase is a form of rating, and in some companies that’s how employees see it. The question is not whether employees will be rated, it is how they will be rated and whether
    the process is transparent, well defined and understood by all employeees or
    done quietly in hallway discussions and secret meetings.

    Last, I completely agree with your point “The tools exist to make
    performance management a lot more effective — we just need to spend invest in
    them”. Performance management is hard but it is a critical part of
    creating a sustainable high performing company. Like so many things that are
    good for us, the most valuable are often the most difficult. And by “spend” I would say it is far more about spending time training managers and leaders on how to clearly define performance expectations and give effective feedback, and less about spending money on new systems and process design efforts.