2/3 of Companies Are Reengineering Performance Management

After years of highly publicized announcements from big-brand companies that they were abandoning traditional performance reviews, it’s no surprise that the allure of doing away with the unpopular practice continues to be a hot topic. What isn’t being publicized is what more companies are doing: reengineering performance management as a means to develop talent with an emphasis on continuous feedback conversations.

A recent pulse survey from the Institute for Corporate Productivity (i4cp) found that 67% of the 244 companies participating reported that rethinking their current performance management practices was on the agenda, driven largely by:

• Feedback from employees (59%);
• mandate by the CEO or others on the C-suite (47%);
• need for improved business results (47%).

Drastic changes?

But while performance management processes are facing unprecedented scrutiny and overhaul in most companies, this doesn’t mean that performance management in one form or another is going away altogether anytime soon.

Given the extensive work i4cp continues to do in collaboration with our Performance Management & Engagement Exchange, a working group of companies dedicated to finding more impactful ways to manage performance, the move to reengineer the traditional annual performance review makes sense. So when companies say they are rethinking performance management, what sorts of changes are they talking about?

Our research found that:

• Only 10% of companies say they have discontinued annual employee performance reviews in the last year. However, another 11% say they will be looking at this over the next 12 months.
• Only 15% say they have eliminated the use of performance ratings, with another 15% planning to do so over the next year.

While these numbers appear modest, they are up across the board as compared to four years ago. In a 2012 i4cp study, only 38% of companies said they were planning fundamental changes, with just 6% indicating they had discontinued their performance management or rating system in the past year.

In short: performance management changes are occurring more frequently, but the majority of companies still aren’t going to the extreme of completely doing away with dropping reviews, ratings, or rankings. But that’s not necessarily a bad thing—many of our member companies have made the decision to not wholly abandon traditional performance reviews—instead, they are opting for improvements to the process, training for managers, and other means to improve communication and drive employee performance. The data backs these trends up:

• Three-fourths (76%) have increased emphasis on providing employees ongoing personalized performance feedback.
• Nearly 70% have provided specific training/development to managers on how to deliver effective performance feedback.
• And 34% have established a process and/or technical capacity to capture and communicate real-time performance feedback.

Download the survey results now (i4cp members only).

More performance management research, tools, case studies and more are available exclusively to i4cp members. Contact us to see if your company qualifies for membership.