Getting beyond "one-and-done" in performance management

Performance management
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Katherine Jones
Partner and Director of Talent Research
Mercer
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The Plainspeak Analyst is Katherine Jones, Partner and Director of Talent Research at Mercer, the world's largest human resources consulting firm. Her job is to design and deliver insight research and services to Mercer's global clients. She was previously VP, Human Capital Management Technology Research at Bersin by Deloitte. She has a PhD in Curriculum and Instruction from Cornell University.

Change in employee performance management is universal: 88% of companies researched globally made changes to their performance management approach in 2016, according to a recent Mercer study. More are planning changes in the year ahead.

Traditionally, performance evaluation was a once-a-year event which often caused great angst in employees (especially if stacked ranking was tied to bonuses) and a major time-loss for their managers.

Moreover, research tells us it has little use to the organization in terms of productivity gain or performance improvement.

The purposes were many: rationalizing salary changes, giving one-time bonuses, documenting comments for future firing compliance, and more, but rarely did this one-time event have as its purpose the improvement of an employee’s performance on the job.

Now we see a different view toward the management of the workforce: rather than solely a “one-and-done” evaluation of the past year, managers are shifting the discussions in two ways:

  • first, toward the concept of continuous conversations throughout the year
  • second, toward a focus on development that addresses both skill or knowledge gaps and future career preparedness

New technology often enters into this picture.

Both HRMS and talent management software providers have been revamping their solutions over the past three years to have robust applications that support ongoing feedback and coaching, capturing conversations and development advice throughout the year for review.

Widespread use of mobile technology is noted here.

Mercer’s 2017 Global Talent Trends research states that 64% of employees reported at least twice-a-year career conversations with their managers.

Interestingly, solely 22% of employees say increased feedback from their managers would positively impact their situation at work; on the other hand, 31% specifically identified more regular feedback on their progress overall as desirable, although this was not seen as positively impacting their work.

Organizations worldwide are making these changes with most making the shift to career and development conversations in the past year, with others planning to shift their performance management focus in the year ahead.

Plans for change in the next 12 months are greatest in Singapore, Australia, and France, with the least interest in this trend demonstrated by organizations in Japan.

Employees view continuous feedback as the foremost way career support is provided for them in Australia, Canada, Hong Kong, Japan, Singapore, and the UK.

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To rank or not to rank?

Stacked or forced ranking (sometimes called "forced distribution"), according to Bersin by Deloitte, is a practice that directs managers to evaluate their employees' performance against other employees and distribute ratings into a prespecified performance distribution ranking (e.g., 1 through 10; A, B, C; top 20%, middle 70%, and bottom 10%).

This approach is used to ensure rater reliability and avoid grade inflation.

Organizations use this information to compensate and develop employees accordingly.

This year, almost one-third of companies dropped forced rankings, especially in South Africa, Mexico, and Singapore, and 34% plan such a change throughout 2017. But the change in this direction is not universal:  ironically, over one-third added forced rankings in the past year and close to one-third plan to add stacked rankings in the year ahead.

Almost two-thirds (61%) eliminated or plan to eliminate performance ratings altogether – this was most appealing to companies in Mexico and Singapore.

Conclusion

I see some geographical differences, but overall most employees value clarity of direction and reward for their contributions—both as individuals and as part of the teams they work with. This points to clear goal-setting on the part of managers—with goals that are obtainable and measurable—in that the employee and the evaluator can tell when the goal has been accomplished.

More so than the year previous, the 5,400 employees in Mercer’s research were emphatic about the rewards for their efforts: they sought recognition of their strengths and compensation that acknowledged their contributions.

The shift to “continuous conversations” about an employee’s performance at work rather than the “one-and-done” approach has clearly taken hold in the minds of HR leaders, and many are pursuing software applications to better support that initiative.

For more information about what 7,000 executives, HR professionals, and employees say about the world of work, click here for your free copy of Mercer’s 2017 Global Talent Trends report Empowerment in a Disruptive World. 

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