Performance Management – the Next Generation

Is there a new, more grown up attitude to performance management emerging?

Netflix abandoned formal reviews some time ago, reportedly seeing them as being “too ritualistic and too infrequent”. In place of this, managers were encouraged to have frequent and honest conversations and to make better use of the data available through improved business analytics to provide a more accurate picture of how people were doing.

It also scrapped Performance Improvement Plans (PIP) as they were seen to be misleading: most people who were put on a PIP were those whose skills and abilities no longer fitted with the emerging role requirements, largely driven by new technology and changes in the market and were ready to move on from the organsiation. But how does a company like this then deal with poor performance based on other reasons?

Netflix effectively replaced their formal performance review process with an informal 360 degree feedback process. They deliberately kept to a simple ‘stop, start, continue’ set of qualitative questions and over time moved away from doing this in an anonymous fashion, towards having people sign – and own – the feedback they gave to others and many teams have opted to give feedback face to face.

How refreshingly adult and open.

Of course, many organisations are not ready to take a step as large as this, but we think that there are things that can be done to move performance reviews on to a more mature, open and forward-looking footing. For example, you can:

• Train and equip managers to have on-going and continuous performance conversations with their direct reports.
• Bring 360 degree feedback into the fold. Most organisations use some kind of multi-rater feedback process and this can provide invaluable performance information, which transcends the manager-subordinate relationship and the potentially limited view and biases that brings. Take a critical look at your 360 questionnaire and ask:
  • Does it help create a culture of feedback – will our 360 software/process allow us to take a journey towards a culture of greater openness and honesty with regards to feedback?
  • How flexible is the system/process you have to adapt to your needs? Can you tailor it to different roles, parts of the business, individual teams? Can people add and ask their own questions, if there are particular behaviours or areas of performance on which they would like feedback?
  • Do the reports support good quality conversations between managers and direct reports? Do they provide guidance on development, strengths, areas where there has been significant improvement and coaching-type questions?
  • Does it inform other talent management activity – can data from 360 degree feedback be used in succession planning, promotion, identifying training needs?
  • Can you create personal development goals, track progress, collect ongoing feedback from trusted colleagues, managers, coaches or mentors?
  • Can you see improvement in performance over time?
• Place more trust in your managers. If performance review is linked to some form of reward process, accept that most managers are capable of making fair and consistent judgements and make good decisions regarding recognition. Consider providing your managers with a reward budget – a nominal bonus amount for each team member and the manager has to decide whether to effectively take away from the majority in order to recognise the strong contribution of one or two individuals.

If you would like to explore how to take your Performance Management activity to the next level, and encourage more continuous performance conversations, get in touch with us and talk about our Talent Performance system.

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