Abstract At the end of the year, we must have a performance appraisal at the end of the year. From the heart, do you like the way of year-end evaluation? The study found that both managers and employees are very disgusted with performance evaluation. The biggest drawbacks of the annual assessment are:
At the end of the year, we must have a performance appraisal at the end of the year. From the heart, do you like the way of year-end evaluation? The study found that both managers and employees are very disgusted with performance evaluation.
The biggest flaw in the annual assessment is that due to over-emphasis on financial rewards and punishments, and must be carried out at the end of the year, it forces employees to be responsible for past performance, but it is difficult to improve current performance and develop future skills, which are the long-term survival of enterprises. The essential.
So, what is the ideal performance appraisal method? Don't miss out on today's heavy articles. The authors are well-known professors from Wharton and Columbia University.
In 2002, Brian Jansen, then head of global human resources at Colorcon, a pharmaceutical company, stunned HR executives: he told them that the company will no longer have annual performance evaluations in the future. . Jensen later introduced in a report at Wharton that Colorcon found a more effective way to strengthen employee requirements and performance management: team leaders gave immediate feedback on individual employee goals and weekly Deliver small bonuses to outstanding employees.
The abolition of the traditional assessment process and all related matters was still a heresy idea at the time. But it is estimated that more than one-third of US companies are doing this now. From Silicon Valley to New York and around the world, many companies are bidding farewell to annual assessments and replacing them with more frequent and informal feedback between managers and employees.
As expected, technology companies are ahead of the competition, such as Adobe, Juniper Networks, Dell, Microsoft and IBM. However, there are professional service companies such as Deloitte, Accenture, and PricewaterhouseCoopers; other pioneers in industries such as Gap, Lear, Oppenheimer Fund, and even traditional performance appraisals. Benchmarking company, General Electric.
Rethinking performance evaluation is undoubtedly the top priority for many company management. Others believe that the annual assessment is a practice of the last century, criticizing it for lack of collaboration and innovation. Employers have finally admitted that neither the leader nor the subordinates hate the evaluation process. Now, assessing this eternal problem is even more critical as the labor market heats up and talent retention issues pick up again.
The biggest flaw in the annual assessment is that due to over-emphasis on financial rewards and punishments, and must be carried out at the end of the year, it forces employees to be responsible for past performance, but it is difficult to improve current performance and develop future skills, which are the long-term survival of enterprises. key. According to our observations, this is also the main reason why more and more companies cancel formal performance evaluation. In contrast, regular conversations about individual performance and development have shifted the focus to building an ideal workforce that will keep the organization competitive now and in the future. Business researcher Josh Bersin estimates that while there is still a long way to go, about 70% of multinationals are turning to this model.
Three reasons to cancel the traditional performance evaluation From the development process of performance evaluation, it can be seen that the enterprise abandons the traditional performance evaluation for three clear business reasons.
Talent development has become important again. Under competitive pressure, companies must constantly improve their talent management. At present, as the supply of the labor market tightens, it is important to retain talents again, and professional service companies are working hard to eliminate the factors that lead to employee dissatisfaction. Traditional performance appraisal systems are in the list because digital scoring hurts employees' need and enthusiasm for learning. Instead, feedback is provided immediately after the employee contacts the customer, which helps the manager better coach and also enables the employee to more effectively understand and apply the manager's recommendations.
In 2011, Kelly Services became the first major professional services company to cancel performance appraisal. In 2013, PwC first tested the water in a small area and then cancelled the performance evaluation of all the more than 200,000 employees. Deloitte followed up in 2015, and Accenture and KPMG soon announced the same news.
The need for agile. For many companies and industries today, rapid innovation is a major source of competitive advantage, which means that future demand will continue to change. The traditional performance management system mainly evaluates the past and current performance of employees and makes them responsible for the results. Since the organization does not necessarily want employees to do the same thing, it does not make sense to stick to this system.
GE's new business strategy based on innovation is the biggest reason why the company has recently begun to cancel employee ratings and annual assessments. The new performance management model draws on agile methods and adapts to the FastWorks innovation platform with the goal of creating products and bringing them to market. Managers will still have a summary conversation with their subordinates at the end of the year, but the purpose is to emphasize the requirements in regular feedback (called “touchpointsâ€, touchpoints) and to discuss two basic questions: What should my behavior persist? What behaviors should change? The annual target is replaced by a short-term “priorityâ€. Like many of the companies we've observed, GE is piloting 87,000 employees in 2015 before considering a full implementation of the new system.
Team work takes center stage. Eliminating mandatory rankings and weakening performance assessments' attention to individual performance is conducive to shifting management focus to team work. This is evident for retailers such as Sears and Gap, which are among the most unexpected of the early innovators of performance management. Complex customer service work now requires front-line employees and back-office employees to cooperate with shelf management and passenger flow management. Traditional assessment methods make it difficult to improve team performance or track collaboration.
Gap still retains the employee's annual assessment, but only to summarize the performance feedback during the year and adjust the compensation accordingly. Employees still have mission objectives, but like other companies, the goal is short-term (quarterly). Gap has adopted the new evaluation system for two years, and the satisfaction with performance management has been significantly improved, and the store business target has achieved the best record. However, Rob Ollander-Krane, senior director of Gap performance management, said the company needs to improve further in setting extension goals and focusing on team performance.
These three reasons lead to the abandonment of formal performance evaluation, and at the same time put forward requirements for the company to design a performance management system that is more in line with the business cycle. In theory, managers and employees should communicate feedback at the end of the project, the achievement of goals, challenges, etc., so that employees can develop future skills while solving current problems. In most companies, managers dominate the setting of short-term goals, and employees can discuss career development with managers at any time.
Perhaps the most important thing is that the company's performance management changes are due to business needs. Whether it is a professional services company that must train talent to cope with competition, a company that must continuously respond to employee performance to achieve rapid innovation, or a retail company that needs storefronts and back-offices to serve customers, all face the same problem.
Of course, many HR executives worry that if the manager can't do it once a year with his subordinates, then the formal evaluation process is now cancelled. How do we expect them to communicate with their subordinates more frequently? This question is indeed true; but we have optimistic reasons.
As GE discovered in 1964 and repeatedly confirmed for subsequent research, it is very difficult to seriously and honestly discuss the problems at work and to make decisions such as lowering performance pay. Performance evaluation at the end of the year is an excuse for delaying feedback, and managers and employees may have forgotten what happened a few months ago. If the annual assessment is cancelled, these two problems will not exist. In addition, almost all companies that cancel the traditional evaluation system train managers to communicate personal development issues with employees, and will confirm with employees whether managers can do this.
Moving to an informal assessment model, companies must build a culture that supports continuous feedback. As Megan Taylor, director of business collaboration at Adobe, pointed out at a recent meeting, if the new model is not naturally grown, it will be difficult to maintain.
Persistent Challenges Abolishing formal performance appraisal is a major change in the human resources arena, and the biggest resistance comes from the HR department itself. The reason is simple: the vast number of processes and systems that HR has built over the years, based on performance evaluation. Experts in employment law have always recommended organizing standardization management, designing objective evaluation criteria to support each employment decision, and documenting all relevant facts. The abolition of the formal assessment blatantly violates such recommendations, but the problems that these traditional models fail to solve, the new methods are not necessarily resolved.
When organizations replace traditional performance management models with new ones, they still face the following challenges:
Collaborate with personal goals and organizational goals. In the traditional model, business goals and strategies are laid out from the top of the organization. All departments, and all employees, must follow and strengthen the goals set by the senior management when setting goals. But this model works only when the business goals are clearly expressed and remain constant throughout the year. As mentioned earlier, this is not always the case, and the goals of employees may be tied to specific tasks. So as the project progresses, the mission changes, how do you coordinate your personal priorities with the goals of the entire organization? This problem is even more pronounced if the business objectives are short-term and must be adjusted quickly based on market changes. This is a new challenge for companies, and there is no clear solution.
Reward outstanding people. Through formal performance appraisal, managers can clearly reward individuals based on their individual contributions. Companies that change their performance management systems have not explicitly abandoned the pattern of pay-for-performance, and they are trying to assess the impact of new practices.
These companies still retain the difference in reward margins, based on a manager's qualitative evaluation rather than a numerical score. Juniper Networks and Cargill's pilot projects have proven that managers can reasonably distribute performance bonuses without numerical scoring. In fact, both line managers and HR departments agree that a more detailed assessment of employee performance over the course of a year will make the final performance reward decision more convincing.
However, it is worthwhile for most managers to summarize the feedback given to employees in the past year before making a performance pay decision. Deloitte's managers are doing this now. If so, will they come up with something similar to the annual assessment score, even if the score may be more rigorous? Does this make the manager's focus back to the duties and results, thus subtly affecting employee development?
Identify employees with poor performance. While managers may think that performance assessments are needed to find out which employees are underperforming, the traditional model actually doesn't help much. First, employee performance scores fluctuate greatly. Studies have shown that the probability of accurately predicting the current year's score based on the previous year's score is only 1/3, so it is difficult to conclude that an employee is unqualified. Second, the HR department is always complaining that the line manager cannot record poor performance in the assessment. Even if they can do it, wait until the end of the year to turn red, and let the bad performance last too long.
We have seen that some companies that cancel formal assessments require managers to identify problematic employees in a timely manner. Juniper Networks expressly requires that managers verify quarterly performance against subordinates. The proportion of unqualified is usually only 3%, and the HR department will intervene. According to Adobe, the new performance management system reduces the dismissal of employees because under-performing employees receive more timely supervision and guidance.
Still, since most managers are reluctant to point out poorly performing employees, we don't think it would be easier to cancel a formal assessment. In addition, all companies we observe still set a “performance improvement plan†for employees who are considered to be in need of help. Such programs are generally flawed, in part because many problems that cause employees to perform poorly cannot be resolved through management.
Avoid legal troubles. HR employee relations managers are often worried that if the promotion is no longer based on a seemingly more objective numerical score, discriminatory litigation may increase. However, traditional assessment methods do not prevent discrimination. Although managers must fully assess the contribution of employees each year, they are given considerable autonomy to avoid being affected by prejudice. There is considerable evidence that managers will discriminate against some employees by playing low scores.
Gap's leaders say the company is adopting new assessment methods, in part because of employee complaints, and research confirms that the evaluation process is often biased and not effective. There are more women and ethnic minority employees in the retail industry, especially vulnerable to unfair treatment. Indeed, formal assessments are more about emphasizing bias than suppressing prejudice. If companies accurately measure performance scores and performance pay data, it will be easy to see that among employees with the same performance scores, women and minorities do not raise as much as white men.
Having said that, it is not certain that the new performance management model will effectively eliminate discrimination. Gap found that the elimination of performance scoring improves the fairness of decisions such as compensation, but because of the subjective judgment of managers, every qualitative information considered by decision makers may still be affected by bias.
Guaranteed continuous feedback. In recent years, most companies have established HR information systems that can place annual assessments online and link them to salary adjustments, succession plans, and more. Building an information system is not a need to adapt to continuous feedback, which is why many informal feedbacks have only verbal comments and no written records.
In response to this situation, the technology industry launched an app that allows managers to give feedback at any time and record it as needed. GE's PD@GE app ("PD" stands for "performance development") helps managers recall and summarize the records and materials of previous feedback; employees can use it to seek guidance when needed, of course, endless The feedback guidance may make the receiving party exhausted. In addition, although the app supports real-time communication, feedback between peer employees is not always useful. Anyone familiar with the 360-degree assessment knows that level feedback is generally not objectively objective; someone may take the opportunity to help or harm a colleague. For example, Amazon's competitive culture encourages employees to pick each other out, and mandatory rankings provide the motivation to step on others. The greater the effect of level feedback, the more likely it is to have problems.
In performance appraisal, the concept of organizing high levels is important. For example, Intel launched a two-year pilot project to replace formal performance scores with informal feedback. Although managers can clearly distinguish between different performances of employees and assign performance bonuses without performance scoring, senior management chooses to restore performance scores, which is considered to bring healthy competition and clear results. Real estate developer Sun Communities management also opposes the abolition of formal performance evaluations, and they believe that formal feedback is critical to employees performing their duties. Medtronic canceled its performance score a few years ago, but Medtronic resumed its performance rating due to the more traditional performance management philosophy of the acquired Irish company Covidien.
Some companies have not completely returned to the old model, but are looking for a compromise. As mentioned earlier, Deloitte has completely eliminated the performance score and adjusted it to give the project leader and manager a four-point rating each quarter, providing employees with a detailed “performance snapshotâ€. PwC's customer service department recently made a similar adjustment: employees still don't get only one rating per year, but they get five competency scores and other feedback on personal development. Part of the company's recovery of digital scores is actually a requirement for employees, especially partner candidates who want to know how they perform.
After New York Life canceled the formal performance appraisal, the performance salary increase was shared internally and was treated as a performance score; what people call a “shadow ratingâ€. As this phenomenon began to influence other talent management decisions, the company eventually resumed its formal evaluation. But to stay committed to employee development, New York Life has retained other changes to the talent management system, such as quarterly conversations between managers and employees.
We would love to see how this "third road" effect will be. They can also fail if they lack the support of management and organizational culture. However, for most organizations, adhering to the traditional performance management model may be a poor option. Companies that believe that radical change will not work can at least think carefully about whether the current assessment process can help them solve performance problems and train future talent. After all, performance assessments are not generally considered to be the least popular business practices if they are not fundamentally flawed.
Peter Cappelli Anna Tavis | Wen Peter Capelli is a professor of management at Wharton. His books include "Is it worthwhile to go to college?" (Will College Pay Off? A Guide to the Most Important Financial Decision You'll Ever Make, Public Affairs, 2015). Anna Tavis is the Director of the Human Capital Management Education Program at Columbia University and the editor of Human Resources Magazine People + Strategy.
Wang Chen|译 刘铮ç|æ ¡ This article has been abridged. The original text is in the Harvard Business Review, October 2016 issue of The Performance Management Revolution.
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