3 Ways to Fix Performance Management

This post was updated on June 24, 2016.

The explosion of communication channels and tools are shaking up organizations. New software platforms emerging create unprecedented levels of speed, agility, customization, and frequency in inter-office interactions, revolutionizing relationships.

This change in performance management is sorely needed: According to Mercer’s 2013 Global Performance Management Survey, only 3 percent of organizations say their performance management system delivers exceptional value. The consequences of a poor performance management system are severe and can lead to the disintegration of company culture, high employee turnover, and decreased employee productivity. So what does the future of performance management hold?

1. The Annual Performance Review Is Out, Real-Time Feedback Is in

A skyrocketing number of messages, emails and chats being sent each day are making the static annual performance management process seem ludicrously out-of-place and outdated in the modern workplace. In a study completed by Deloitte, they found that over 2 million hours per year were spent on the creation, implementation, collection and analysis of performance reviews.

Immediate feedback is far more relevant and actionable than an annual performance review Click To Tweet

This jaw-dropping inefficiency led Adobe to revamp their performance review process in 2012, swapping out their annual review process with a new system called Check-In, which promotes a disciplined process for setting clear expectations and goals and exchanging frequent feedback based on the expectations. According to Donna Morriss, the SVP of People and Places at Adobe, the implementation of the Check-In process has resulted in significantly increased on-going development amongst employees and improved leadership from managers.

Read: GE re-engineers performance reviews and compensation

New platforms such as Reflektive integrate directly into employee workflows to capture the instantaneous, context-rich feedback between employees that naturally happens every day, in real-time. Immediate feedback is far more relevant and actionable than comments that are typically delegated in an annual performance review, empowering employees to improve as soon as they receive the feedback. By creating an intuitive, simple plugin that makes it frictionless for employees to interact, Reflektive remove barriers in communication and cultivate a culture of ongoing feedback for more engaged, high-performing employees.

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2. Data-Driven, Objective Reviews Become the Standard

The wealth of employee communication that is generated on a daily basis creates a massive opportunity to tie feedback and reviews to concrete data points. In research published in The Journal of Applied Psychology, 62 percent of variance found in performance review ratings were based on an individual raters’ peculiarities of perception. Actual performance accounted for only 21 percent of the variance. “Thus ratings reveal more about the rater than they do about the ratee,” quipped Manuel London in How People Evaluate Others in Organizations.

With more data, feedback can become more objective and specific, reducing subjectivity and unconscious biases that have a tendency to seep into annual performance reviews, which rely more on memory and emotion. As Deloitte puts it: “To recognize each person’s performance, we had to be able to see it clearly. Consistently capturing feedback daily also allows managers to avoid missing any key events or red flags, not only empowering them to keep a pulse on the morale but also look for trends in their workforce performance.”

3. Data Ownership Empowers Employees

LinkedIn, Slideshare, Behance, Medium and Dribbble are all examples of platforms that empower employees to showcase their expertise and knowledge, making resumes seem antiquated and less influential. Similarly, new tools that capture data around employee performance empower employees to own data that reinforces their reputation with them wherever they go, which is more important now that employees change jobs more frequently than in the past. Increased transparency through data will lead to greater accountability and stronger performance.

Increased transparency through data will lead to greater accountability and stronger performance.

With real-time feedback, data-driven reviews and data ownership powering the future of performance management, employees and managers alike will have an opportunity to leverage new technologies to build more transparent, merit-based company cultures. By focusing on objectivity and growth, companies can achieve higher performance and cultivate more engaged workforces.

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