Five companies that have led the way in setting new performance management trends
Rarely a day that goes by without news that a company has altered one of its performance management processes or introduced a new performance management tool to boost productivity. So it’s essential that forward-thinking companies keep up to date with the latest in HR trends and recent case studies to make sure they are getting the best out of their employees.
A number of revolutionary companies have led the way for dramatic changes in how organisations — both Fortune 500 multinationals and SMEs — conduct their performance reviews and manage their staff. In their wake, companies the world over are adapting their performance management practices and readjusting their once-firmly held beliefs regarding performance ratings and annual performance appraisals.
Below, we have collated five important case studies of organisations who have shaken up their existing processes and have reaped significant benefits in terms of productivity and performance.
1. Adobe introduced continuous performance management in place of annual reviews
Adobe were the forerunners of change when they abandoned annual performance appraisals back in 2012. They replaced them with regular check-ins, supported by frequent feedback – both positive and constructive. There are no performance ratings or rankings and they allow different parts of the organisation to determine how frequently they should hold check-in conversations, according to their work cycles.
The result has been a marked increase in employee engagement, with voluntary turnover decreasing by 30% since check-ins were introduced.
2. Deloitte saved 2 million working hours per year with weekly check-ins
Deloitte was the first big name to announce in 2015 that it was scrapping once-a-year performance reviews, 360-degree feedback and objective cascading. This was after it calculated that these processes were consuming a remarkable 2 million hours a year across the organisation.
Deloitte’s new process requires every team leader to check in with each team member once a week to discuss near-term work and priorities, comment on recent work and provide coaching. To ensure these check-ins take place frequently, the check-ins are initiated by the team members, rather than the team leaders.
These weekly check-ins are supported by quarterly reviews in which team leaders are asked to respond to four future-focused statements about each team member. Rather than asking team leaders what they think of the team member, which is what traditional performance ratings do, they ask what the team leader would do with the team member.
3. General Electric put an end to ‘rank and yank’ performance management
Under the reign of its former CEO, Jack Welsh, General Electric was the most well-known proponent of annual performance ratings and forced distribution curves. For decades, GE operated a ‘rank and yank’ system, whereby employees were appraised and rated once a year, following which the bottom 10% were fired. Not exactly a recipe for employee engagement.
In 2015, GE announced that it was replacing this approach with frequent feedback and regular conversations called ‘touchpoints’ to review progress against agreed near-term goals. This is supported by an online and mobile app, similar to our own Clear Review performance management tool, which enables employees to capture progress against their goals, give their peers feedback and also request feedback.
Managers will still have an annual summary with employees, looking back at the year and setting goals, but this conversation will be more about standing back and discussing achievements and learnings, and much less fraught than annual reviews.
4. Accenture abandoned ratings for performance development
As of September 2015, Accenture, one of the largest companies in the world, disbanded its former ranking and once-a-year evaluation process. Like GE, Accenture has decided to put frequent feedback and conversations at the heart of its new process and focus on performance development, rather than performance rating.
As Ellyn Shook, Chief HR Officer at Accenture, stated: “Rather than taking a retrospective view, our people will engage in future-focused conversations about their aspirations, leading to actions to help them grow and progress their careers.”
5. Cargill introduced on-the-job conversations in place of annual appraisals
Like Adobe, Cargill, the US food producer and distributor, started to transform its traditional performance management processes back in 2012, when it introduced ‘Everyday Performance Management’. It removed performance ratings and annual review forms and instead focused on managers having frequent, on-the-job conversations and giving regular, constructive feedback. They have made this work by:
- Regularly rewarding and recognising managers who demonstrate good day-to-day performance management practices.
- Sharing the experiences and tips of their successful managers.
- Holding teams accountable for practising day-to-day performance management.
- Building the skills needed to succeed at Everyday Performance Management, including effective two-way communication, giving feedback, and coaching.
The outcome has been impressive, with 70% of Cargill employees now saying they feel valued as a result of their ongoing performance discussions with their manager.
When we look at what these five organisations have implemented, we can see some very clear trends emerging which are likely to form the basis of performance management for the years to come. These trends are:
- Regular one-to-one performance conversations, or ‘check-ins’, initiated by the employee.
- Frequent, in-the-moment feedback from peers and managers, both positive and constructive.
- Near-term objectives rather than annual objectives. Setting and reviewing objectives regularly, rather than once a year.
- Forward-looking performance reviews, focusing more on development and coaching and less on assessment.
- Dropping performance ratings.
- Performance processes supported by mobile-friendly online performance management software.