The Rush to Replace and Re-engineer Performance Management Accelerates around the World
Bersin by Deloitte (Predictions for 2016).
In a recently published research report entitled ‘Predictions for 2016’ Josh Bersin of Deloitte Consulting writes …
In late 2015, I had the opportunity to visit China, Hong Kong, and several cities in India. During these visits, I talked with many companies—some established global organizations, some government- and state-owned enterprises, and many fast growing industrial or technology companies. In every single case, the topic people wanted to talk about was performance management.
People wrote about performance management at a fevered pace during 2015—articles about the demise of ratings and the end of forced ranking, as well as the adoption of check-ins, feedback systems, and agile goal management systems. In 2016, I predict this enormous wave will likely crest and move even faster. Nearly every company may start to challenge this core part of HR. What is really happening is quite profound. We have entered a new era of “management thinking”—one which takes us to a new set of principles about how we lead and empower people, and how we set goals and evaluate performance. The core of these new models is development—how we can make the annual process more regular, more developmental, and more empowering.
Why is this occurring? There are many big drivers.
- 1. Of course the existing process is too complex. Many managers (88 percent, in fact) believe it is not worth the time we put into it.
- 2. The process is not developmental enough. Today we want to “build skills” in our workforce and engage our people; simply giving them goals and a rating do nothing to further this mission.
- 3. I believe a major shift is taking place in management thinking, something that we see take place every few decades.
The whole process of performance management simply has to change. Not only has the philosophy of management shifted—we have a much younger workforce; people do not have time for long, end-of-year paperwork exercises; and, neurological research shows that ratings simply do not drive performance.
Yes,forced ranking does not always work either, as much research now shows. Interestingly, this wave of change has created a situation in which business practices are ahead of technology. In most areas of HR, innovation comes from vendors—and these vendors pioneer new ideas, which are then adopted throughout HR and learning. (For instance, e-learning was pioneered by companies like WebCT and Click2Learn; traditional goal management was pioneered by SuccessFactors and others, etc.).
In this new area of performance management, the big software vendors are all trying to catch up. While companies like Workday, SuccessFactors, Oracle, and Cornerstone OnDemand have been wildly successful building end-to-end HR and talent applications, none of them (as yet) have really nailed the “next generation of performance management” needs.
I have talked with most of the pioneers in this space (including Adobe, New York Life, Cisco, GE, and many others); almost all of these companies are building their own tools to make their new processes work. Dozens of new vendors are starting to address this market (such as Reflektive, TMBC, Simple Improvements, BetterWorks, TinyPulse, and many others); most of these are small companies and none have global scale. In 2016, these companies will likely gain a lot of traction; some of them
could be acquired.
My advice to you is this—take the time to look at what is going on out there, and make sure you are embarking on your company’s journey in a highly strategic way. Performance management is not really an HR process; it is a “management process”—and your senior leaders should be intimately involved in the discussions, development, and rollout of a change.
Finally, I recommend that you do some testing. Initiate a few pilot programs to make sure that you have the details right. Every company’s culture is different; it will likely take a few years for your new process to “stick.”
Full Research Report available at bersin.com