At Actionable, we know that when it comes to fostering employee engagement and cultivating behavior change, regular conversations beat once a year performance reviews hands down. That’s why we love seeing more and more organizations moving away from the traditional performance management practice of holding an annual review, and exploring alternatives.
A recent report from the Neuroleadership Institute (NLI) highlights this ongoing movement. A range of organizations—both large and small, new and well-established—are asking themselves: Do traditional performance reviews actually improve performance?
Many of them seem to think that the answer to that question is no. Add to that the anxiety, paperwork, uncomfortable meetings, and unclear ROI that often go along with this practice, and it seems understandable that companies are ready to try something new.
To be clear, this is not one of those Silicon Valley startup trends that won’t translate to most organizations. Deloitte, Adobe, IBM, Netflix, GAP, and Goldman Sachs are just a few of the organizations that are re-engineering their performance management practices to move away from the traditional approach.
The recent research by the NLI profiles more than two dozen organizations that report at least two years of sustained success from moving away from a traditional once a year, ratings-focused performance management processes, to alternative programs that tend to emphasize regular feedback and conversations.
What’s more, 100% of those organizations reported an increase in employee engagement and felt that the change had been worthwhile.
This isn’t to suggest that this transition is easy or that it can be achieved overnight. In fact, one of the most interesting parts of the NLI report highlights the key organizational prerequisites that support a successful move away from traditional performance management approaches. At the top of the list? Manager and organizational capability to have more frequent and better quality conversations. Specifically, organizations that focused their efforts on improving their managers’ conversation skills, and ability to provide real-time feedback, were better positioned to effectively implement these performance management changes.
It’s a great feeling for the Actionable team to see so many organizations realizing the potential and value that more frequent and better quality conversations can provide to support engagement and behavior change. And it comes as no surprise to us that embedding the skills to have effective and regular conversations would support better results in organizations trying to adopt practices that drive improved performance.
After all, the current movement to overhaul traditional PM comes at the same time as organizations continue to hear that their employees want more frequent and better performance feedback as well as ongoing conversations about their work. Simply abandoning performance management entirely without replacing it with a more effective strategy to provide this information and connection is unlikely to deliver the desired results.
When a practice as time-consuming and maligned as traditional performance management isn’t delivering on its central objective—to improve organizational and individual performance—it makes sense to step back and ask what it’s really meant to achieve.
Can you say that your current approach to performance management is actually improving your team and organization’s performance?
If you can’t respond with a confident yes, maybe it’s time to consider a new approach.
We believe that engaging your team members regularly in real discussions, aligning their focus on business objectives, and making individual commitments to actionable and measurable behavior change dramatically improves workplace effectiveness. That’s why we’re watching this growing movement to redesign performance management with interest, and a little bit of joy.
A world where organizations embrace regular conversations to drive individual and business results is a world that we want to live in.
In fact, we might even host the welcome party.