No Change in Sight for Performance Management

An overhaul of performance management is much-needed, but it's been slow in coming.

Performance management (PM) has been decried as total bunk by some and as the most important component of talent management by others. The contention surrounding the topic indicates the necessity of a fundamental shift in how organizations approach PM: Despite related technologies changing over the years, the PM process has remained mostly unchanged.

A recent report from the Institute for Corporate Productivity, Performance Management: Still Waiting for Real Change, found that only 3 percent of organizations are planning to make changes to the PM system they currently have in place. Although most organizations (86 percent) do some form of PM, few seem to be doing it effectively.

Roughly seven of 10 respondents believe that their organization's PM process is not managed well, and that it does not have a positive effect on performance. Twenty-nine percent of organizations report that their employees do not consider their PM systems to be fair.

Two well-known organizations that have made radical changes to their PM systems are Adobe and REI. Adobe abandoned its controversial ratings system for an approach that involves ongoing feedback, clear expectations that are revisited throughout the year, and gaining employees' buy-in to performance reviews. REI also shifted from annual formal performance reviews to an ongoing, informal, actionable process.

Whereas the above two organizations have made these changes work for their managers and employees, the ongoing feedback loop requires a significant amount of time—a rare commodity in today's workplace. Other obstacles exist, from lack of buy-in to budget constraints.

Despite agreement on the importance of improving PM, significant change to any established organization-wide process requires widespread support and careful planning, and as such, can't happen rapidly.