Do You Need to Throw Out Your Performance Management System?

18 February 2016
Emily Tullock

by Emily Tullock

Former Communications Officer of the CHS Alliance

How do you measure performance management in your organisation? Does your performance management system take into account the modern workplace realities of part-timers, those working from home, checking email in the evenings, and juggling family commitments?

How do you measure performance management in your organisation? Does your performance management system take into account the modern workplace realities of part-timers, those working from home, checking email in the evenings, and juggling family commitments? A recent Future of Work forum in London, challenged participants to consider whether their organisation has the wrong assumptions about performance management.

The majority of performance management systems were designed during the post-industrial revolution where the time spent on a factory floor correlated directly to output. Time remains an important part of how we think about performance which means organisations make assumptions about how people use their time that are no longer valid. Most performance management systems still presume that people can work all the time and that work only take places at work.

Current workplace trends

  • Both men and women working has led to men entering the world of domestic labour. University graduates of both genders now spend more minutes per day on direct childcare than ever before. This challenges the assumptions that unpaid work is a woman’s domain and if someone isn’t in the office, they’re not a high performer.
  • Blurring of leisure and work time. Performance management systems were designed when people only worked at work. How can performance management systems take into account people working outside traditional working hours?
  • Push towards flexible working. The total number of hours worked has also increased for both men and women in the professional classes over the past 30 years.

What are the consequences of a performance management system that isnt fit for purpose? A Cerus Consulting research paper suggests performance management systems are killing businesses because they seldom stimulate engagement and more often than not destroy it. “Consequently their real impact on organisational performance is minimal”.

According to Future of Work founder Lynda Gratton, it’s now time to reshape the performance management system as many of the assumptions it was created on are broken.

Workplace assumptions

  • Performance is observable. Highly skilled work is difficult to observe and because we can’t really measure what people do, we measure how long they do it for. This leads to people under-reporting how long tasks take, presenteeism, a system that favours working long hours, and stressed and sick staff.
  • A normal distribution of performance that classifies most staff as average with minorities of high and lower performers. This forces managers to fit staff into categories that might not be accurate for highly skilled work and results in undetected talent.
  • Employees work fulltime. Today’s workplace is experiencing trends of older workers, joint ventures, freelancers (now 1/6 of the workforce), micro-enterprise (90% of businesses in the OECD have less than 10 staff), and increased women working (865 million women will enter the workplace from developing countries in the next decade).

Forum participants also heard case studies from Future of Work members on innovations in performance management.

Accenture has remodelled its system from performance management to “performance achievement”. Eight million hours were being spent annually on performance management with 75% of that on rating and documentation. The new system shifts to talking to people rather than about them with a move away from comparison to an emphasis on coaching from line managers to help people identify their strengths. Conversations focus on the future rather than the past and look to outcomes rather than processes.

Both KPMG and Microsoft no longer have forced performance rankings. Salaries, promotions and bonuses at KPMG are reviewed on a case-by-case basis within a conversation rather than directly following rankings. At Microsoft, managers “connect” with staff every 3-4 months to focus on what the individual is doing to drive impact for the company and customers.

At PepsiCo, there are four stages of performance management: align (setting objectives and closing last year), explore (a quality career conversation on the individual’s strengths, career aspirations and support needed), progress (changing and adapting objectives), and reflect (self evaluation). Half of the individual’s objectives are linked to developing the organisation, developing themselves, and developing others.

While these examples are drawn from the private sector, they undoubtedly offer innovative ideas that could be adapted and trialled in the humanitarian and development sectors. As Alex Swarbrick, Senior Consultant at Roffey Park, suggested in a recent CHS Alliance blog: “No longer can we pretend our organisations are like machines, and humans only ‘resources’. Instead we need to be at home with the reality that our organisations are complex dynamic human systems, with their own unpredictability and ambiguity, and create cultures which sustain effectiveness and allow people to flourish.”

What is your experience with performance management systems? Have you come across innovative performance management policies and practices in our sector? We would love to hear from you on this so please share your thoughts and experiences below.