Three Reasons Driving The Performance Management Revolution

Last year on my lightly-viewed LinkedIn blog, I wrote a short post proclaiming 2015 as the year of performance management reform – this was after several years coaching in organizations that had an urgent need to evolve into an Agile environment, but continued to drive traditional (and conflicted) performance management & reward/punish appraisal programs through their respective HR departments.

Fast-forward over a year later. We are witnessing the growing momentum for a revolutionary overhaul – especially in knowledge-work organizations. The most recent treatment of this subject is in the October 2016 Harvard Business Review piece entitled The Performance Management Revolution. Consider setting aside some focused time to dig deep into this article, as I found it quite valuable — especially as it directly references the Agile Manifesto within the context of coaching & feedback, the need for frequent learning & growth, and other aspects that optimize for business outcomes in a complex world.

Why Drop Traditional Performance Appraisals?

Three explicit business reasons are shared in the article:

  • The return of people development – With talent now in short supply, optimizing hiring practices and attracting “growth mindset” oriented professionals is key. These are people who have a strong desire for continuous learning, candid feedback and mentorship. Companies must offer strong development opportunities to attract this type of talent.
  • The need for Agility – In today’s world, annual (or bi-annual) performance appraisal “reviews” are not frequent enough to adapt and optimize an organization based on changing business conditions.
  • The centrality of teamwork – Shifting away from appraisals and emphasizing accountability helps foster a team-based behaviors. The article shares experiences from Sears and Gap — two companies that are surprising innovators in performance management.

The case seems strong enough, but there are implications to an overhaul – including goal alignment, rewards, how to identify ‘poor performers’, and the potential for subjective and biased performance assessments. The article discusses these issues, the research, and how some companies are dealing with it.

In Closing

What is the performance management system like in your company? Do you need an overhaul to optimize for people growth, agility and teamwork? What experiences can you share?

__________________

If my writings resonate with you, please consider spreading this message so we can energize and inspire the entire professional world together. I invite you to ‘Follow’ my professional journey through LinkedIn. I am also on Twitter.