The October 2016 issue of the Harvard Business Review provides a great update on what is happening to performance management at the moment. As organisations grapple with modernising their process, the article analyses what is driving current dissatisfaction, where it is leading and how this fits with past trends.
The biggest limitation of annual reviews stems from their emphasis on financial rewards and their end-of-year structure, holding people accountable for past behaviour at the expense of growing talent for the future, according to authors Peter Capelli and Anna Tavis. In contrast, regular conversations about performance and development move the dial to building the workforce for the future.
The tension between the traditional and newer approaches reflects the different philosophies about managing people – how much do you “get what you get” with an employee and how much can you develop performance. The article provides a talent management time line from accountability to development over the decades.
The main reasons given for dropping appraisals centre on the focus on people development, the need for agility and the importance of teamwork. All this change is bringing new challenges, central to how HR has been operating and using performance management and ratings process as part of other processes. Both the HBR article and our discussion at the CIPD Ireland /Accenture HRBP forum last month identified emerging challenges to performance management around
- Aligning individual and company goals
- Rewarding performance
- Identifying poor performance
- Avoiding legal troubles
- Managing feedback.
The article, The Performance Management Revolution, captures the essence of many of these challenges, and will become a classic read for business leaders and HR professionals.