A practical look at building and implementing your perfect performance management process.
After writing about Deloitte’s radically simple reviews, the number one response we received was “my company does X, so these questions won't work for us.”
It is a great point, Deloitte’s four questions aren’t designed to be universal, they’re designed for one particular professional services firm with 263,000 employees. Just based on the odds I’m willing to bet that is not what your organization is like.
That said, at PerformYard we think the approach Deloitte took is universal. That is why we are following up our last post with this how-to guide.
If you’re reading this article, you probably already feel in your gut that a simple review process would bring positive change to your organization. But, if you’re going to drive change you’ll need a stronger case.
Deloitte started with a straightforward cost/benefit analysis of their existing process. It is remarkable how many performance management strategies we come across have never been scrutinized even in this very simple way.
What does the review process cost our organization?
What value does the review process create for our organization?
Deloitte started with a simple counting of hours to judge the cost of their ratings system. They found that the organization was spending close to 2 million hours a year to create their annual rankings. This is inline with the 8+ hours per employee estimates that we have seen at many organizations.
Then the team at Deloitte solicited internal feedback on the value of their reviews. Most employees appreciated knowing where they stood, and were happy to have a transparent process in place. For leadership the ability to differentiate between employee performance for compensation decisions was absolutely necessary.
After running through this exercise it became clear that one, the annual review and ranking process was very expensive, and two, some of the outcomes from reviews were very important to both employees and leadership. Right away this started to rule out certain options, for example a pure continuous feedback system without quantitative ratings wouldn’t satisfy the needs of leadership and might not satisfy the needs of employees.
Deloitte that their two main needs were a way to let employees know where they stood, and a way to differentiate between employees for compensation and promotion decision making.
The team at Deloitte looked at their current review process which involved extensive ranking discussions and a long review form with many skill focused questions and realized that their current process was a very inefficient way to achieve their two needs.
They also realized that a large part of every review was essentially useless. Managers were answering many questions about an employee’s ability in different skill categories. Research has shown that people are horrible at rating skills, which meant these sections of the review were generating meaningless data.
We see these types of questions in many review forms. Questions like “How well does this employee live up to the company value of ‘Be Genuine’?” That is a very well intentioned question that will create data that never get used, and that probably never should be used because the data are likely meaningless as well.
All of these questions that weren't serving the needs of their quantitative review were removed.
Most review questions are too clever by half. These are questions that try to sneak up on some piece of information without directly asking for it. For example some organizations may feel that embracing the company culture is one of the most important characteristics of a successful employee. But then in order to determine a score for "culture fit" the company's forms might ask questions about the employee’s tendencies at work or how well the employee embodies certain values.
But why not just ask “Does this employee embrace and contribute to the company culture?”
Your managers should all be able to answer that question far more accurately and you don’t have to dance around to get the answer you want. If a manager doesn’t understand the company culture that is a bigger problem which will show up in that manager’s own review.
Don’t micromanage your managers with review questions. Let them give you a straight answer to your real question.
When Deloitte had finished simplifying their performance reviews they were left with a problem. The new system helped employees know where they stand and it helped leadership easily identify top performers, but the system did nothing to drive improved performance.
Deloitte felt that driving performance was something the Performance Management team should be working on, and they felt it was important for the long term success of the organization.
What happens in a lot of organizations is that someone says, “Ok let’s add X, Y and Z to the performance reviews. That will force managers to engage with their reports."
Not at Deloitte. They recognized that driving improved performance was different from creating reviews, and so they refused to complicate and corrupt their review process with other goals. Deloitte created a completely separate weekly check in process that was much better suited to the goal of helping managers drive employee performance.
PerformYard drives employee performance for the enterprise through our intuitive web-based software platform. PerformYard software enables executives to better leverage their most important resource — people.