five lessons to learn from companies that are redefining performance reviews.

Traditional annual performance reviews are becoming a thing of the past – and for a good reason.  A simple Google search of the term ‘performance reviews’ brings up all the negative issues associated with a typical review process – stress, anxiety, employee disengagement, etc. Thankfully, organizations are taking note. Many Fortune 500 firms, including 70% of multinational companies, are abandoning the outdated performance review approach and replacing it with a focus on performance management instead. It makes sense – an average manager spends 210 hours annually doing appraisals, yet 90% of HR executives feel annual reviews do not yield accurate information. Besides there is tedious paperwork, office politics, and other sundry issues that plague the traditional performance review approach.

As organizations increasingly redefine how performance is reviewed and measured, here are five lessons to learn from companies that have pioneered new approaches:

#1Ditch rigidity for flexibility: When General Electric overhauled its annual yank and rank annual performance review process that had been around for decades, it became a talking point across the world. A top 10 company in the Fortune 500 list, GE’s managers were used to a rigid performance measurement framework, wherein they met their subordinates once a year to rate performance and eliminate the bottom 10th percentile. The company first did away with its forced ranking system that compared employees with their peers and resulted in the firing of those in the bottom 10%. In 2015, GE went further and scrapped its formal annual review process entirely for its 300,000 employees. It has been replaced with a much less rigid framework wherein managers guide employees on performance development through an app named PD@GE that ensures regular interaction and feedback.

#2 Cultivate a culture of trust: Eli Lily, a leading global Fortune 100 pharmaceutical company, is renowned for its innovative HR practices. When both supervisors and employees at Eli Lilly expressed dissatisfaction with the traditional performance management process, citing distrust in ratings and lack of transparency as key reasons, the company set out to revamp its performance management approach. They adopted a policy of building employee trust - as trust forms the cornerstone of a healthy work environment. Under the new system, employees are encouraged to take initiative in managing their performance, while the management ensures that their voices and ideas are heard. As a result, bonds between managers and employees are strengthened, leading to superior employee engagement and solid business growth.

#3 Feed employees’ passion to drive high performance: Accenture realized that the traditional performance management approach wasn’t working for them when nearly half of the company’s employees reported feeling discouraged or disengaged as a result of their performance feedback. Using a 60-day sprint research initiative, the company identified that a key factor driving performance at work is individual passion, leading to the birth of a new approach – the ‘Surround System’. One of the key messages of this approach is ‘Know yourself’. It urges Accenture employees to take multiple strength assessment tests in order to identify and pursue their real passion.

#4 Look to the future, rather than dwell on the past: An internal survey at Deloitte India served as an eye opener for the consulting behemoth. It revealed the need for a more nimble, real-time and individualized performance management framework that focused on future requirements, rather than assessing past results. The company then launched ‘Reinventing Performance Management’ (RPM) — a system that abandoned the once-a-year review and even 360-degree feedback tools. The essence of RPM lies in its speed, agility, engagement focus, and the one-size-only-fits-one approach. As 80% of the company’s workforce comprises millennials, RPM’s ability to provide individualized real-time performance feedback has been received well by employees.

#5 Build an inclusive performance culture: At Axis Bank, inclusivity overtakes meritocracy as the organization believes in equal performance development initiatives for all employees – not just its star performers. The bank’s ACElerate (Axis Capability Enhancement Programme) serves as a ‘second chance’ for employees who volunteer to take on stretch targets to receive superior performance ratings. The move has enabled Axis Bank to eliminate employees’ negative perceptions associated with lower performance ratings while encouraging them to perform better. ‘Axis Blitz’ and ‘With You’ are other initiatives that reinforce ‘role model’ behaviors and provide confidential counseling services to employees.



Clearly, the employee performance management revolution is at its peak. What is your strategy to spur power-packed individual performance at your organization?

 

Sources: https://hbr.org/2016/10/the-performance-management-revolution

https://www.linkedin.com/pulse/why-fortune-500-companies-abandoning-tra…

https://www.thefreelibrary.com/How+Eli+Lilly+fixed+a+broken+performance…

https://economictimes.indiatimes.com/jobs/appraisals-companies-across-s…

https://www.axisbank.com/annual-report-2015-2016/nurturing-people.html