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Why Performance Management is Failing Your Best Employees

Only a third of employees given the highest scores by traditional performance management processes are actually high performers

Businessman Ground Cut from Beneath Him Trap PitfallWhile the trickle of companies that have made big changes to their performance review processes is unlikely to turn into a flood anytime soon, those that have made the change seem to have missed a real opportunity to improve employee performance.

In many cases, companies have toned down the attention paid to assigning scores and employee rankings for past performance. This is because it costs a lot of time and money and doesn’t really improve decisions about what kinds of roles and responsibilities, feedback and development to give to employees.

While it’s certainly no bad thing to reduce costs or give some of the firm’s most senior managers some time back in their schedules, the far bigger opportunity when undertaking a wholesale rethink of a company’s performance management program is to design one that identifies the kind of standout contributions required in what is now a very different environment to the one employees worked in even five years ago.

‘Performance’ has Changed…

To explain how work has changed, take a dramatic simplification of its history. We once lived in a time when all economic growth came from farming. Farmers went out and planted seeds, crops were produced, and sold, and this demonstrated economic growth. Then, during the industrial revolution, machines came to replace muscles and we created products via manufacturing.

Then, in the twentieth century, in a third period of the economic revolution, computers became the tool that elevated some of our brain power. Today, the workforce is changing yet again and economic development is increasingly driven by collaboration.

In a 2012 survey of 23,000 senior leaders and managers globally (pdf), 80% said they had been given more responsibility in the past 12 months, 76% had been asked to achieve more and given broader objectives, 54% reported frequent shifts in job responsibilities, and 50% said their role had become more global.

This work environment requires employees to work as easily with colleagues in different functions and parts of the world as those in the next-door office and, simultaneously, any “value” that employees create is becoming more interdependent on others’ work. This means that high-performers have become those that excel in their performance at individual tasks and in working with and through others.

CEB’s research calls these type of employees “enterprise contributors,” and a workforce made up of them can drastically improve a company’s ability to hit its financial goals. In today’s networked environment, economic success requires overall performance to be greater than the sum of the individual performance. Therefore, enterprise contributors must be identified early in the process and the collaboration must be facilitated and encouraged.

…So Should Performance Management

In traditional performance review processes, only a third of employees that get the highest scores are “high performers.” Two-thirds of the high performers who are helping power the firm along are never even on the radar or, worse, at the bottom of the list.

If managed correctly, performance ratings and reviews could be an asset to an organization, helping identify enterprise contributors that can spread knowledge, expertise, and allow for collaboration to happen within an organization, and so ultimately improve a company’s performance.

Those HR teams and senior managers considering a performance management change should not make the decision to save time or cost. Instead, they should change their performance management approach to identify network performers and increase collaboration among their employees.

Performance management programs that look forward, and deliver more feedback from more people more frequently, will yield better results not just for employees, but for business productivity and performance.

 

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