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Employee performance management shifts toward collaborative engagement

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Analyst Ben Eubanks says the move to continuous feedback, coaching and development is real, but early adopters admit they still need ways to rate employees.

Employee performance management is becoming more personalized and informal -- ironically, due in part to automation -- as more organizations replace the much-maligned annual review and ratings with frequent coaching and skills development. But is the supposed evolution of employee performance management living up to the hype, or is it largely a game of semantics?

"Some people are saying, 'Hey, we're dumping ratings.' That's the headline; and then you get into it, and they're still saying we still have to track who's doing well because there's compensation tied to that, there are succession and career pathing and things that are tied to how well someone does," said Ben Eubanks, principal analyst at Lighthouse Research & Advisory. "They have to keep track of those in some way."

Ben EubanksBen Eubanks

The trend toward more flexible and innovative employee performance management is, nonetheless, real, according to Eubanks, who sat down for a podcast at the annual HR Technology Conference and Exposition held in Chicago. He moderated a panel of HR leaders from Deloitte Consulting, PricewaterhouseCoopers, VMware and Workday who are early adopters of a strategy that has come to be known as continuous performance management.

"These are not small companies. They're not just making a small shift. They're making radical shifts," Eubanks said. The experience of Deloitte helps explain the change. The consultancy was spending 2 million hours to figure out ratings, he said, when it realized all the effort might not actually be boosting performance.

Software success depends on corporate culture

Eubanks was asked about an uptick in niche vendors selling software for the new style of employee performance management and whether more established human capital management vendors, such as SAP SuccessFactors and Oracle, have comparable offerings. "The bigger companies are starting to catch on to it a little bit," he said.

But employee performance management software is only part of the picture. "Some of it's tech-based, and some of it's the process and the culture of the company," he said.

Organizations that are handling performance management the "wrong" way conclude that managers don't do performance reviews often enough, according to Eubanks. "[It's] something they actually hate, and let's make them do it 12 times a year instead of just once," he said.

In comparison, companies doing the best job of employee performance management help their managers to engage employees in a dialog about their professional development. "They're helping their people to have better conversations -- making it more about that very interpersonal relation between the employee and the manager."

Eubanks went on to summarize highlights from his research into the characteristics of companies with successful employee performance management strategies. Companies with a controlling, top-down culture see people as assets to be managed, and who are sometimes broken and need to be fixed. In contrast, those with more collaborative and creative cultures view employees as assets that are appreciating -- in other words, worth more tomorrow than they are today.

"The performance process is geared around helping to enable performance versus just managing and tracking it," he said.

Next Steps

Learn why General Electric eliminated performance ratings

Read a handbook on analytics and performance management

See what experts predicted about performance management trends

Essential Guide

Making the shift to continuous performance management

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How has your organization revised its employee performance management process?
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Dave - Wouldn't it be great if performance reviews were a thing of the past? Maybe so, but the annual review is at least a chance to give a good account of oneself.
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I agree, Dan. They still seem to provide a good reality check, assuming they're done fairly and without too much bureaucracy. There is a certain amount of value just in looking at one's own performance against the goals, besides what managers think of it.
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