We all know that traditional performance management systems can be cumbersome and ineffective in driving future performance. Companies like Deloitte and Adobe have recognized this issue and have implemented innovative performance management systems that focus on agility, individualization, and ongoing feedback. However, implementing a new performance management system can be challenging, and companies may face resistance to change, difficulty collecting and analyzing performance data, and challenges with training and development.
In this article, I will explore some common challenges that companies face when implementing new performance management systems and provide strategies for overcoming those challenges.
Deloitte's Approach to Revamping Performance Management Systems
Deloitte recognized this issue and set out to create a system that was more agile, individualized, and focused on fueling future performance.
The new system at Deloitte has several hallmarks, including speed, agility, and constant learning. It is designed to be one-size-fits-one, as opposed to a one-size-fits-all approach. The company has eliminated cascading objectives, once-a-year reviews, and 360-degree feedback tools. Instead, the performance management system focuses on collecting reliable performance data that can be used to drive future performance.
To design this new system, Deloitte relied on three pieces of evidence. First, it conducted a simple counting of hours to determine the amount of time spent on performance management. The company discovered that it was spending close to 2 million hours a year on performance management, which was a significant drain on resources.
Second, Deloitte reviewed research in the science of ratings. The company found that "idiosyncratic rater effects" often led to ratings that revealed more about team leaders than the people they were rating. This realization highlighted the need for a more objective and data-driven performance management system.
Finally, Deloitte conducted a carefully controlled study of its own organization. The company discovered that three items correlated best with high performance for a team: "My coworkers are committed to doing quality work," "The mission of our company inspires me," and "I have the chance to use my strengths every day." Of these three items, the chance to use one's strengths every day was the most powerful across the organization.
With all this evidence in hand, Deloitte set out to create a radical new performance management system. The new system is designed to be more agile and individualized, with a focus on fueling future performance. It involves regular check-ins between employees and managers and encourages ongoing feedback and coaching. The system also includes a feature called "performance snapshots," which provide employees with real-time feedback on their performance.
The new system at Deloitte has been successful in driving performance and improving employee engagement. The company has seen significant improvements in productivity, employee retention, and overall job satisfaction. Other companies have taken notice of Deloitte's success and have begun to adopt similar performance management systems.
Deloitte's innovative approach to performance management is a prime example of how companies can adapt to changing times and create systems that are better suited for the modern workplace. By focusing on agility, individualization, and constant learning, companies can create performance management systems that are more effective in driving future performance and improving employee engagement. Thank you for reading and I hope this article has sparked some thought-provoking ideas for your own organization.
Other Examples of How Companies Have Adopted Similar Performance Management Systems
Adobe is one company that has adopted a similar performance management system. The company eliminated annual performance reviews and instead implemented a system that focuses on ongoing feedback and coaching. The new system is designed to be more agile and individualized, with a focus on driving future performance.
Another example is General Electric (GE). The company has replaced its traditional performance management system with a new system that focuses on continuous feedback and coaching. The new system includes regular check-ins between employees and managers, and it allows employees to set goals and track their progress throughout the year.
Microsoft is another company that has adopted a similar performance management system. The company eliminated its stack ranking system and replaced it with a system that focuses on ongoing feedback and coaching. The new system is designed to be more agile and individualized, with a focus on driving future performance.
These companies have seen significant improvements in productivity, employee engagement, and overall job satisfaction as a result of their new performance management systems. By eliminating traditional performance management systems and focusing on ongoing feedback and coaching, these companies have created systems that are better suited for the modern workplace and are more effective in driving future performance.
Statistics on the Improvements These Companies Have Seen
Adobe's new performance management system has led to a 30% reduction in voluntary turnover and a 50% reduction in HR administrative time. The company has also seen an increase in employee engagement and overall job satisfaction.
General Electric's new performance management system has led to a 10% increase in employee productivity and a 5% increase in employee engagement. The company has also seen a significant improvement in its ability to retain top talent.
Microsoft's new performance management system has led to a 10% increase in employee engagement and a 5% increase in productivity. The company has also seen a reduction in turnover and an increase in overall job satisfaction.
These statistics demonstrate the significant impact that a well-designed performance management system can have on an organization. By focusing on ongoing feedback and coaching and eliminating traditional performance management systems, these companies have created systems that are better suited for the modern workplace and are more effective in driving future performance.
Examples of Companies that Have Struggled with Implementing New Performance Management Systems
One example is Accenture, which implemented a new performance management system in 2016. The new system was designed to be more agile and individualized, with a focus on ongoing feedback and coaching. However, the company struggled to effectively communicate the changes to employees, which led to confusion and frustration. Additionally, the company faced challenges in collecting and analyzing performance data, which made it difficult to accurately evaluate employee performance.
Another example is Microsoft, which faced some challenges when it first implemented its new performance management system. The company struggled to effectively communicate the changes to employees, and some employees felt that the new system was too subjective. However, Microsoft was able to address these issues by providing additional training for managers and employees and by making adjustments to the system based on feedback from employees.
These examples highlight the importance of effective communication and training when implementing a new performance management system. It is also important to collect and analyze performance data accurately and to make adjustments to the system based on feedback from employees. By taking these steps, companies can avoid some of the challenges that can arise when implementing a new performance management system.
Common Challenges Companies Face When Implementing New Performance Management Systems
There are several common challenges that companies can face when implementing new performance management systems. One of the biggest challenges is resistance to change. Many employees may be comfortable with the traditional performance management system and may be resistant to change. It's important for companies to communicate the benefits of the new system and involve employees in the process.
Another challenge is collecting and analyzing performance data. It's important to collect accurate and reliable data to evaluate employee performance and identify areas for improvement. Companies may need to invest in new technology or training to ensure that they are collecting and analyzing data effectively.
Training and development for managers and employees is another challenge that companies may face. It's important to provide adequate training and support to ensure that managers and employees are able to effectively navigate the new system. This can include training on providing feedback, setting goals, and using new technology.
Finally, it's important to continually evaluate and adjust the new performance management system. Companies may need to make adjustments based on feedback from employees, changes in the business environment, or new technology. It's important to have a process in place for evaluating the effectiveness of the new system and making adjustments as needed.
By recognizing these common challenges and developing strategies to address them, companies can successfully implement new performance management systems that drive future performance and improve employee engagement.
Effective Strategies for Involving Employees in the Implementation Process
One strategy is to involve employees in the planning and design phase of the new performance management system. This can include soliciting feedback from employees on what is working well with the current system and what needs to be improved. Companies can also involve employees in focus groups or pilot programs to test out new ideas and gather feedback.
Another strategy is to communicate clearly and frequently with employees about the new system. This can include providing regular updates on the progress of the implementation, explaining the benefits of the new system, and addressing any concerns or questions that employees may have.
Training and development is another key strategy for involving employees in the implementation process. Companies can provide training on how to use the new system, how to provide feedback, and how to set goals. This will help ensure that employees are comfortable with the new system and are able to effectively navigate it.
Finally, it's important to recognize and reward employees for their contributions to the implementation process. This can include highlighting successes and accomplishments, recognizing employees who have provided valuable feedback or have shown leadership in the process, and providing incentives for employees to participate in the process.
By involving employees in the implementation process and providing them with the necessary training and support, companies can ensure that the new performance management system is well-received and effective in driving future performance.
Conclusion
Implementing a new performance management system can be a daunting task, but with the right strategies and approach, companies can successfully navigate the process and create a more effective system for driving future performance. By involving employees in the implementation process, communicating clearly and frequently, providing training and development, and continually evaluating and adjusting the new system, companies can create a system that is well-received and effective in improving employee engagement and driving future performance. As HR and leadership professionals, it is our responsibility to stay up-to-date on the latest trends and best practices in performance management and to help guide our organizations through the process of implementing a new system.
Jonathan H. Westover, PhD is Chief Academic & Learning Officer (HCI Academy); Chair/Professor, Organizational Leadership (UVU); OD Consultant (Human Capital Innovations). Read Jonathan Westover's executive profile here.
