Why the traditional performance
management cycle is on the way out

Stefan Op de Woerd
Stefan Op de Woerd

The days of traditional performance management are numbered. It simply doesn’t serve its purpose any more. This at a time when effective and engaged employees are more important than ever. What can you do about this as an organisation? And, equally as important, what shouldn’t you be doing?

Jochem Aubel and Stefan Op de Woerd set out to answer these questions. They talked to HR professionals, managers and employees across a wide variety of different organisations and came up with some surprising results.

Organisations are changing all the time...

Change is a constant both within and outside the world of work. Over recent decades, technology has radically changed all our lives, with artificial intelligence fuelling this trend. Many jobs that are now done by people will be performed by robots in future.

Most organisations understand this all too well. The only way to be able to respond quickly and effectively to these changes is to remain agile. As a result, organisations are moving in a big way towards agile forms of co-working (such as Scrum) and formal, hierarchical decision-making is giving way to self-managing teams.

... but performance management has remained the same for 100 years

However, many organisations still have a very traditional take on the performance management cycle. Goals are set for one year, there are two formal reviews annually and line managers are responsible for the process and the review. This setup has remained more or less unchanged since the beginning of the 20th century (in the days of the Industrial Revolution) when the performance management cycle first came into being. Back then, the boss’s word was law. He decided what was best for and what you should be doing. The traditional performance management cycle undoubtedly fits this model perfectly.

But, times have changed. The traditional boss is gradually disappearing from view and, these days, it is much more common to find that employees are their ‘own boss’. So, it is hardly surprising that 93% of people are dissatisfied with the traditional performance management cycle in their organisation.

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Back to basics of Performance Management

So, let’s go back to basics. What is the performance management system actually for? Good question! To help get the best from people, so that you can achieve your objectives as an organisation. That aim is precisely the same as it was 100 years ago.

The big difference is that nowadays we seek to get the best from people in a completely different way than happened 100 years ago. It’s well-recognised that the command & control approach no longer produces the desired results and that playing to people’s talents and motivations is much more effective. Nonetheless, in many businesses performance management still operates largely along the lines of command & control. It’s clear from this that they are far from a good fit… The big question is how can you change the cycle to suit the modern work environment?

Don’t throw the baby out

If something isn’t working anymore, you need to change it, right? And, when something needs to be changed, you’ll find there’s no shortage of visionaries, consultants, trendwatchers and experts on hand to tell you how to do it. Frequently, they will present inspiring visions of how things could work. Unfortunately, all too often these visions are far removed from what happens on the ground in organisations.

We don’t believe in throwing the baby out with the bathwater. Rather than changing everything wholesale, it makes much more sense to look at what you are doing at the moment. Which aspects of what you are doing now contribute to an effective performance management system, and how can you build on these?

You’re already half way there

And, now for the good news: very many organisations are already doing much more in this respect than they think. Let’s take another look at why you have a performance management system in the first place: To help get the best from people, so that you can achieve your objectives as an organisation. It’s very likely there are already all sorts of activities going on in your organisation that contribute to that objective: one-to-ones, coaching programmes, talent development programmes, 360-degree feedback, project evaluations, sprints, daily stand-ups, retrospectives and so on.

It’s just a pity these activities are not incorporated into the performance management cycle…

Bringing different worlds together

The real problem of the traditional performance management cycle is that it is disconnected from day-to-day reality (whereas it was perfect for the needs of 1920). 

As a result, the performance management cycle is perceived as a ‘form-filling exercise’ that takes up a lot of time without actually achieving anything. Therefore, if you want to modernise your performance management cycle, it’s best to design it around what happens on the ground day-to-day. 

So, help employees to reflect regularly on how they contribute to organisational goals during the meetings and conversations that are already happening. The big question is whether or not you still need separate review meetings as part of your performance management cycle.

The end of performance reviews: hype or trend?

In the slipstream of their efforts to transform performance management, many businesses have also opted to stop doing formal performance reviews. They want to get rid of everything that smacks of the traditional command & control approach, root and branch. There are now clear signs that there are limits to how far you can take this as an organisation. In many cases, there is in fact value in having a formal review. After all, you want to reward your employees according to their contribution to the business. What’s different is that the person doing the evaluation does not necessarily have to be the manager. For example, more and more organisations are experimenting with forms of self-evaluation or evaluation by the team.

Whoever does the evaluating, the new performance management cycle needs to move away from simply being a form-filling exercise. On the contrary, it should help employees to maximise their contribution to the organisation’s goals throughout the year. That’s where technology can help.

Make performance management simple and effective?

Download our e-book “7 steps to transform your Performance Management”

HR technology: a help or a hindrance?

The right HR technology prompts employees to consciously reflect on their contribution to the organisation at relevant times. Examples might include revising your goals ahead a team meeting, making a record of the outcomes of a coaching session or asking for feedback from a colleague with whom you have worked. The great advantage here is that employees are building a picture throughout the year to serve as their own performance review. All of which is going to save a lot of time!

Are you thinking about technology to support your performance management system? If you are, make sure the solution you choose is very flexible. After all, the essence of the ‘new performance management’ is that it should support what you already do in day-to-day practice. What happens in practice is different for every organisation, and frequently differs from one department – or even one individual – to another. Sadly, it is too often the case that the performance management software determines what happens on the ground rather than the other way around. So long as this is the case, enthusiasm for the performance management system among employees is not going to increase greatly. You have been warned!

The 3 pitfalls you definitely want to avoid

It is clear that the traditional performance management cycle has well and truly had its day. When transforming your performance management, you can of course learn a lot from organisations that have already made this change. Whatever you do, make sure you avoid these pitfalls:

  1. Don’t throw the baby out with the bathwater (make sure you build on what you already have)
  2. Performance management shouldn’t be separate from what happens on the ground (link it to practice)
  3. The performance management system shouldn’t dictate how it happens on the ground (what happens in practice should dictate how system works)

Jochem Aubel and Stefan Op de Woerd are the founders of Dialog, surprisingly simple software for effective performance management based on regular 1-to-1s. Want to know more about how Dialog supports employees and managers to achieve this? Take the product tour.

Read on..

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