Transforming performance management? Start with the end in mind


Part 2 of a 3-part series

Posted by Joan Goodwin, Diane Morris, Greg Scott, and Josh Davis on October 16, 2019.

We’ve all been cautioned about the importance of preparation before taking action. This can be especially true for performance management transformations – sometimes organizations are so eager for change that they jump right in and fail to consider what they are truly hoping to achieve. In this post, we’ll explore how organizations can set themselves up for achieving the expected results by starting from a place of intentional exploration.

The first part of this series describes common pitfalls of performance management transformations. Without a thoughtful design and robust change management strategy, you may fail to motivate and develop your employees, which may deepen your existing engagement and retention issues. What’s more, repeated attempts at transformation can waste your valuable time and energy while your workforce experiences change fatigue and fails to achieve the results your organization needs.

Based on our experience, organizations looking to transform performance management should make an upfront investment in considering the big picture: Before moving forward, we take severalbig steps back and answer five critical questions that help us get started the right foot. The questions are theoretical and designed to spark conversation and debate, so don’t be afraid to dream big and get messy. And, as we discussed in Part 1, while there’s a lot to be gained by reading about trends and leading practices, your transformation journey should be focused on what’s right for your organization. If your answers to these questions are based on what everyone else is doing, you’re not thinking hard enough!

Question 1: What is the purpose of performance management at our organization?
Deloitte’s 2019 Global Human Capital Trends report identified the characteristics of the social enterprise, making the case for reinvention that is designed around purpose and meaning. For years, the purpose of performance management has been to retroactively address performance issues and to provide an input to a yearly compensation process. Is that truly what your organization needs? Many organizations that have successfully transformed performance management have found the underlying purpose has shifted dramatically. Instead of solving for performance issues in a small portion of the workforce, the focus is on proactively developing and engaging all employees – important, given that employees increasingly look to their employers for meaningful work and growth opportunities. Consider how reframing the purpose of performance can revolutionize your talent strategy.

Question 2: What outcomes do we want to drive?
Think about your talent strategy overall. What do you need from your employees to achieve your business goals? A highly engaged, highly capable workforce? A culture of diversity and inclusivity? Continuous innovation and change agility? Consider how performance management can enable your broader organizational objectives by motivating your employees, developing critical skills, and rewarding the right behaviors. In addition, think carefully about how to develop a coaching culture to support ongoing growth and development, creating meaningful relationships with between employees and managers and enabling continuous learning.

Question 3: What unique cultural elements need to be considered when changing performance management at our organization?
Next, turn your focus to your culture. Performance management should reflect and enable your organization’s mission and values. What differentiates your organization from other organizations? What is unique to your employer brand that attracts prospective talent to your organization? What’s the “special sauce” of engagement at your company? Align performance management to your values by considering how you can both design and brand your transformed approach to reinforce what matters most in your culture and business, now and in the future.

Question 4: What experience do we want employees to have and what do we want them to say about performance management at our organization?
This is a chance to take an employee-centric, human approach as you redesign performance management. As we learned in the first post of this series, performance management has a -60 net promoter score.1 Consider any existing engagement or satisfaction data you have and collect additional employee insights if needed. What empowers your people to work better? What employee experience does the organization need to create to help drive increased levels of performance? Double down on these things. By positioning performance management as a key driver of engagement and part of your employer brand, you can demonstrate your commitment to supporting your people and providing a positive, meaningful work environment characterized by trust and inclusivity.

Question 5: What data do we want performance management to provide for leaders, managers, and employees that it is not providing today?
Do you know who’s ready for a stretch role—or who should move to a new function in the organization? Do you know which managers are best at coaching their teams and developing their people to drive increased levels of performance? If all you get is data that drives compensation decisions, you’re missing out. To help leaders make a broader range of talent and business decisions, evaluate what you’re measuring, and how. Consider what investments in technology can help you on this journey as you strive for more, better, and richer data—build this into your transformation plans—so your leaders can make more informed decisions and have better visibility into your internal talent landscape.

When answered together, these questions can provide a solid foundation for your performance management journey and guide your next steps. But be careful: It’s not enough for HR and Talent to decide. In fact, it is critical to involve key business leaders, front-line managers, and individual contributors. Without broad representation the room, your answers are likely to be incomplete. Make this an opportunity to get a diverse set of voices together for candid dialogue, thorough brainstorming, and purpose-driven design.

While it may take time and effort to align on these big-picture questions, it’s worthwhile to build a vision and align on your end goals before embarking on the transformation journey. In our third and final post in this series, we’ll explore some critical investments you can make along the way.

Joan Goodwin is the performance management practice leader in the Human Capital practice of Deloitte Consulting LLP, focused on talent management, performance and development, culture change, leadership development, and change management.

Diane Morris is a consultant in the Human Capital practice of Deloitte Consulting LLP, focused on performance and development, employee experience, and talent strategy

Greg Scott is the deputy performance management practice leader in the Human Capital practice of Deloitte Consulting LLP, focused on performance and development, HR service delivery, training, and change management.

Josh Davis is a senior consultant in Deloitte’s Workforce Transformation practice, focused on talent strategy and program design that helps organizations create meaningful employee experiences built upon deeply integrated processes, incentives, and systems.

1 Seven Top Findings for Moving from Managing Performance to Enabling Performance in the Flow of Work, Bersin, Deloitte Consulting LLP / Kathi Enderes, PhD, and Matt Deruntz, 2018.

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