How Top Companies Are Redefining Performance Management

Today’s blog post features guest writer Stuart Hearn.

Any ambitious entrepreneur, or forward-thinking manager, is well aware of the importance of remaining competitive. Staying ahead of the curve is of the utmost importance for any HR department, and when it becomes clear to a company that their performance review system is not delivering results, we can always look to top organisations for inspiration.

Technology is here to stay and it is advancing by the day. Given the inherent flaws of traditional performance management systems and the logical progression toward continuous performance management, it is only natural that software should step in to bridge the gap between the old and the new, and to facilitate the process of regular check-ins, up-to-date feedback and effective communication.

IBM’s performance management innovations

In their quest for an optimal, streamlined performance management system, IBM turned to its 380,000 employees worldwide, inviting their opinions as to what to change and how to increase efficiency. Their input was welcomed through Connections, IBM’s social media platform, and the resounding belief was that self-assessments and relative performance rankings should be discontinued. It also became clear that employees, in general, wanted more frequent, and more valuable, feedback. IBM introduced crowdsourcing feedback as a result.

Crowdsourcing feedback is an interesting advancement in performance management. It is based on the concept of ‘wisdom of crowds’ and was born from the idea that managers, on a daily basis, have limited interaction with each and every employee. A true reflection of an employee’s performance, therefore, is better gained from colleagues in the form of ‘social recognition data’.  Observations are not forced or obligatory, but natural and frequently recorded throughout the year.

From this more accurate picture of individual employees’ performance, HR executives gain a better understanding of how one employee is influencing another, and how efficiently the organisation is running overall. The data can also be used for succession planning and talent development. To ensure that employees receive regular feedback and that crowdsourcing is possible, IBM turned its back on Personal Business Commitments, its ten-year-old system, and is now using an app-based performance review system named Checkpoint. With this system, employees can set short-term goals throughout the year and receive feedback from their managers at least every quarter. Employees are ultimately judged on five criteria – innovation, impact on client success, skills, personal responsibility to others and business results.

General Electric’s new, flexible approach

General Electric was, at one point, stuck in an inflexible, infamous performance management rut known as the ‘vitality curve’. In this system, employees were rated in their annual performance review and the bottom 10% were fired. This system was advocated by former CEO Jack Welch. The company has long since changed its stance on rigid performance ranking, and now formal annual reviews have been abandoned altogether in favour of a system favouring more frequent feedback via a feedback app.

This app, known as PD@GE (Performance Development at GE) works as an ‘online notebook’, where managers and employees can communicate and exchange regular feedback, invite comments and advice and generally save the HR department a significant amount of time when it comes to paperwork and forms. Though employees and managers still do have an annual meet-up, the atmosphere has shifted into a more productive exchange addressing how employees can best be guided and helped to achieve their objectives.

Accenture’s rejection of rankings

Consulting firm Accenture is one of the largest companies to have ended performance reviews and rankings when they realised that ranking can backfire and demotivate employees. Pierre Nanterme, Accenture’s CEO, stated that annual evaluations were expensive and, overall, very ineffective. In 2015, Accenture piloted and implemented a more forward-thinking system, opting instead for real-time feedback in an effort to improve communication and track progress, using software and apps to facilitate the process.

Deloitte’s new app-based system

In 2012, Deloitte uncovered the fact that 2 million hours a year were spent completing forms in their company. They also carried out a survey that reflected that 58% of the HR execs believed the existing performance management system didn’t drive engagement or performance. In reaction, the organisation massively revamped their approach to performance management and introduced Snapshot, an app-based management system. Employees are encouraged to schedule weekly check-ins with their managers, and employees can utilise the app at any point to elicit feedback on their performance based on the following five factors: business acumen, global acumen, technical capability, leadership skills and relationships. The new software allows for a much higher degree of flexibility, individuality and interaction.

Author Bio: Stuart Hearn heads up Clear Review, a company that  designs innovative performance management software. He has been working in the HR sector for over 20 years, previously working for Sony Music Publishing and co-founding PlusHR.